Private Student Loans Help Families Find Financial Aid for College Tuition

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A recent article in the New York Times highlighted what many students already knew - that not only was college getting more expensive, but the amount of federal aid available to students is not keeping up with rising education costs.

A recent article in the New York Times highlighted what many students already knew - that not only was college getting more expensive, but the amount of federal aid available to students is not keeping up with rising education costs.[1]

A revision and update to the EFC, or Expected Family Contribution, formula for the 2005-2006 school year translates into an increase in what families have to pay before federal aid can kick in. In the New York Times study (June 6, 2005), the average amount of additional money that families must come up with is $1,749 per year, with some families experiencing increases between $6,000 - $7,000.[1]

Why is the shift of the financial burden moving increasingly towards families? Part of the overall formula for determining federal financial aid is the rate of inflation - as inflation increases, the number of dollars that a family has would be expected to increase.

For example, a family with a household income of $50,000 in the year 2000 would be expected, based on a 3% inflation rate year over year, to have an income of $57,964. in 2005. By that assumption, the family would have more money to spend on education, and therefore federal aid could be reduced.[2]

However, there is a flaw in the formula used to compute federal financial aid, and that flaw is this: the projected rate of inflation which the formula is based on does not necessarily reflect the actual rate of inflation. As a result, the formula assumes people make more money - in some cases, much more - than they actually do.

What is the solution for the increased gap between federal aid and the actual cost of education? Private student loans, such as the Act Education Loan from the Student Loan Network, can help to bridge the gap between federal aid, the actual cost of education, and expected family contribution. Loans such as the Act Education Loan are independent of federal financial aid computations, and are based on the creditworthiness of the borrower, rather than need-based formulas.

Undergraduate, graduate, and continuing education students can apply for alternative student loans at http://www.ActEducationLoans.com http://www.AlternativeStudentLoan.com at any time; students are strongly encouraged to have a co-signer. Parents of K-12 students can also apply for private school loans at http://www.ActEducationLoans.com http://www.AlternativeStudentLoan.com. Students and families can also apply by phone by calling toll-free (866) 229-8900.

[1] To read the original New York Times article, visit:

[2 http://www.finaid.org/savings/tuition-inflation.phtml.

Contact Christopher S. Penn at cspenn@AlternativeStudentLoan.com for more information. ActEducationLoans.com is a division of the Edvisors Network, a multi-national education services company offering students options for managing the entire education lifecycle, from getting into their college of choice to financing their education and beyond. The Edvisors Network is based in Quincy, Massachusetts, with offices in Quincy and London, England. Visit them on the web at http://www.EdvisorsNetwork.com for more information.

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