How Student Loans Have Changed in the Past 10 Years
Student loans are a bit tricky for most college students to understand and really internalize. Not understanding fully, or really knowing how to use student loans can be an incredibly detrimental factor in the success or failure of college students after graduation. There are a few ways that student loans have changed over the years that students should be aware of when considering the new loans that are now available to students everywhere.
In the past, student loans were paid out directly to the university for the exact amount of tuition with little to no money given to students to cover costs and books. This has since changed and many loans now pay out directly to the university for the sum of tuition and then the remainder of the loan is transferred to the student for other expenses.
Pay Out options are also now available in the form of checks and prepaid visa and master cards where in past years check was the only option for payout. It is important for students to talk to a financial advisor either at the school they will be attending or at the loan institution to be sure that their payout will come when needed. Also, students should confirm the loan would cover all the expenses that are going to be incurred during the course of that term or year in school.
Subsidized and Unsubsidized Loans
In past years students were able to receive both unsubsidized and subsidized loans meaning that they could either take out loans that required immediate repayment upon taking out the loan or that were stayed until graduation or as long as the student was enrolled at least half time. Now, graduate students are generally no longer afforded the subsidized loans and are required to take out unsubsidized loans that must be paid as soon as they have been taken out. Also, many times the six-month grace period on interest that has been previously extended to students is no longer in place, which means that as soon as a student graduates, payments are required with interest tacked on.
Early Pay Off Incentives
Many loans offer incentives or bonuses to those that pay off their loans ahead of schedule, most loans have done away with this incentive for loans that have been taken out after July, 1, 2012. These loans can no longer offer incentives for those that have paid off their loans early save for in lower interest rates on auto payments. This means that the only way students can get any sort of benefit for paying off early is through the establishment of auto payments from a checking account each month. This may be beneficial for some but for those that do not have money in their accounts at the time of the payment due date, it can signal disaster.
Decrease of Eligibility
In past years nearly every student was eligible for a student loan of some type to help them through college, now, the restrictions regarding loans are more stringent and many students are not eligible for student loans that may have been prior to 2012. These restrictions are focused on amount of time that the student is enrolled in school, income of the student, and stricter requirements for cosigners. These changes are not blanket for all loans but do affect many loans that most students tend to take out when applying for college. It is beneficial to talk to a financial aid officer or to inquire about loans through the federal financial aid program to see what loans may be available and which loans are not.
Ryan Ayers is a writer who creates informative articles related to education. This article explains how students loans are different now than they were in the past and aims to encourage further study with a Masters in History Online.