Student Loans: How to Get the Load Off Your Back

College Students

The cost of higher education is at an all-time high. This, coupled with the high cost of living, makes college or university education a dream. At first, it falls on the individuals seeking higher education and their families to secure means such as scholarships or more commonly financial aid. This, without a doubt, greatly reduces the inevitable burden of higher education.

There are two types of student loans. To be on the same page, let’s begin by understanding the main differences between subsidized and unsubsidized loans.

Subsidized Loans vs. Unsubsidized Loans

  • During times of deferment either due to economic constraints or the common in school deferment, the federal Government is responsible for the interests accumulated during the said period. As such, they cater to the interest. Needless to say, this happens to be one of the differences between the subsidized and the unsubsidized loans. The federal government is not liable to the interest accumulated during a deferment when it comes to an unsubsidized loan.
  • For persons with subsidized loans, the federal government sorts out the interest as it increases. This means that the payment of the Principal loan amount and the simple interest are meanwhile suspended until completion of studies i.e. up to the time of graduation. On the other hand, (unsubsidized loans) the interest undergoes capitalization. In that it is added to the balance. This is more or less the same as compound interest.
  • The above type of arrangement differs from the forbearance. The forbearance is whereby the interest accrued on the loan is a responsibility of the borrowers be it subsidized or unsubsidized loans.
  • The last but not least difference is the unique ways in which the two sets of loans handle their interest rates and their loan limits. During a students’ freshman year, the subsidized loan has an annual limit of approximately $4000 and increase of $ 500 during their sophomore year and a further $1500 to the freshman amount during the junior year and the years that follow. The allowed limits for the unsubsidized loan; however, includes any amount landed that is beside the subsidized amount but can never exceed the $2000 amount.

In conclusion, let me briefly explain to you the best way you can pay for your liberal arts degree.

First of all, the average annual tuition fee is approximately $1300. Add $1000 for books, and there you have about $3500 on the higher side. The best way to pay for your Liberal Arts College would be through the ‘friendly’ subsidized loans. This, as you can see from the loan limits I showed you above, will comfortably cater for your years in college annually all through to the time you are graduating. Remember, the loan won’t be so hard to pay up once the Grace period before the interests start rolling in is over…this is because the average salary, a professional liberal artist earns annually, is about $54000.

Student Loans: How to Get the Load Off Your Back Credit Picture License: US Department of Education via photopin cc

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