Wednesday, December 08, 2010

Forecast: The State of Student Loans and Financial Aid

My focus has always been on the markets and more macro areas of finance. But I’m working on a new series featuring the “ins and outs” of student loans. My daughter is currently applying to colleges, and as a father I wanted to learn more about the state of student loans from the perspective of a seasoned financial consultant.

So here’s part 1 of that series.

Online Programs, Student Financing
Continuing your education is a critical part of financial success in today’s economic climate. Jobs are competitive and often, applicants with a college degree and little experience have a definitive edge over experienced, seasoned potential job candidates with no degree. Obtaining a college education, however, can be expensive, and many students turn to a variety of cost saving measures to get them on the path to their degree.

Quite often, online programs and trade-oriented colleges can be the best choices for the non-traditional student because of the flexibility they can offer as well as the focus on career-oriented training and education. While many online programs tend to be profit driven and cannot offer all the amenities of traditional degree coursework, there are stalwart programs out there that can provide excellent educational opportunities. Sanford-Brown, for example, has long been a useful resource for workers who want to further their education, and the school offers many practical, career driven degree programs (like pharmacy technician and nursing, two careers in high demand), that can give students the edge they’re seeking in their current jobs, or the ability to switch career paths.

Funding Your Education in 2011

Student loans have long been the first line of defense for those who need a little help funding secondary education. While federal loan programs have been the primary source of borrowed funds for many years, private loan companies do exist and have become more prevalent in recent years as more and more people are looking for loan options due to the economy. Most financial experts (including two I talked to last week), however, still recommend using federal loan programs whenever possible due to the program’s commitment to offering low interest rates and flexible repayment options.

While qualification through a private company may be a slightly easier process (because there are not as many income guidelines and regulations), the federal student loan program offers clear advantages over the private loan market. Federal student loans typically do not begin to accumulate interest charges until the student has graduates or leaves school.

What’s more, federal student loan programs have deferral programs if a borrower meets with unexpected financial hardship during the loan repayment term. Private loan companies tend to be slightly more rigid about repayment and typically cannot offer financing terms and interest rates to rival the federal student aid program.

Stay tuned for more on the world of student loans. It’s an interesting realm ☺.

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