government grants on student loan

Student loan rates, amount of financial aid on the rise

BALTIMORE - Borrowing money for college just got more expensive when higher interest rates on federal student loans went into effect July 1.

However, students may be offered more help thanks to a trend toward increases in need-based aid, which includes grants and scholarships.

At Towson University, need-based financial aid for students has jumped more than 300 percent in the last six years, from about $1 million in 2000 to more than $6 million this year, according to Vince Pecora, director of financial aid.

Pecora said rising interest rates on all types of loans, not just the most recent increase, as well as the skyrocketing cost of college, led to the dramatic increase in aid at Towson.

“I don't think there's a general awareness of the percentage [increase], though we've alerted every single borrower we have and the federal government has notified them," Pecora said.

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Student Loans - How to Shop for a Student Loan - Federal Backing ...

Unlike some other financial aid programs, student loans must be paid back. There are several types of student loans available in the United States. The first is the Federal Student Loans made to the students directly (1). There are no payments until after graduation, but amounts are quite limited. The second is the Federal Student Loans made to the parents (2). They have a much higher limit, but payments start immediately. The third type is the Private Student Loans made to students or parents (3). These have higher limits and no payments until after graduation. Usually the interest will start to accrue immediately though.

The first type of student loan is made directly to the students and is used to supplement personal and family resources, scholarships, grants and work-study. These loans can be subsidized by the Federal government or may not be, depending on the students needs.

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