My Comments: If you follow my writings, you know that I spend time and energy on an idea to help parents of high school age children find free money for their college education. Free money in this sense is money that schools are willing to spend to encourage an applicant they want, to enroll in their school. But they almost never offer any money unless they know the student is being recruited by other schools.

I need your help because I can’t seem to get anyone to pay attention to this. A year ago, the foundation behind the effort I’m promoting arranged for awards that exceeded $12 million. Local parents, instead, prefer to use their own money first and then when that runs out, cause their students to get loans.

The following article came to me from someone who has extensive knowledge about student loans. Loans in my judgement are a last resort for a student. So I need your help to figure out why parents in Gainesville believe loans are better than free money.

What Every Student Must Know About Student Loans

By the early 2010s, about 12 million students were borrowing money to attend American higher education every year, with around 37 million active borrowers in the system.

Estimates for student loan debt went as high as $1 trillion by 2011. By the beginning of 2012, the average student loan balance had risen to $24,301. For the most expensive types of education and training, loan balances rose to above $100,000.

There is no doubt costs are rising – and that graduate wages are not. Thanks to a mixture of education, oversaturation, and recession conditions, about 15 percent of students have late payments and loans in default. More than half of recent graduates in 2012 were underemployed or unemployed entirely, leaving them struggling to make payments. Since the 2005 Bankruptcy Abuse Prevention Act, both federal and private student loans have been immune from outright forgiveness, which means that bankruptcy cannot remove the debt burden (although legislation may change this in the future).

In the modern business world a degree is vital for opening doors, and with the broad variety of bachelors and masters programs and the unparalleled access to online degree programs, American students have excellent educational opportunities. However, most students forget to consider their loans until they have already graduated and reached the “trouble” stage of payment. The government provides options for managing debt at this point, but dealing with student debt begins when students choose the right loans at the right terms. Instead of jumping at the first offered loan, students should examine the different options available and choose the right packages for them.

Subsidized Loans
If you have done any research on student loans, you have probably come across options for both subsidized and unsubsidized loans. Although it can look confusing on the outset, the differences are simple. Take Stafford loans as a typical example. When you qualify for a subsidized Stafford loan, the federal government will cover interest costs while you are in school and for several months after you finish school. In 2012, interest rates for these loans were set at 3.4 percent thanks to an extension of low rate regulations, but are expected to eventually double to 6.8 percent in coming years.