As tuition rates at many colleges continues to rise,
the limits that students may borrow each year has
stayed the same.
Dependent undergraduates may borrow up to $2,625
their freshman year, $3,500 their sophomore year and
$5,500 for each remaining year in Stafford Loans.
Students classified as independent from parents,
may qualify for additional unsubsidized loans. Dependent
students may also receive unsubsidized loans if parents
do not qualify for a PLUS loan.
Unsubsidized loans can be a double edged sword --
they allow the student to pay for college, but borrowers
do not receive the interest free benefit of subsidized
loans.
There is also cumulative limit of $23,000 for an
undergraduate education.
The limits on amounts students can borrow though
federal loans hasn't increased since 1992. In that
time tuition rates have more than doubled.
According to finaid.org, tuition rates increase at
about twice the general inflation rate. On average,
tuition tends to increase about 8% per year. In addition,
general inflation has caused prices for student housing,
meals and other necessary expenses to increase.
For the school year 2005-2006 many colleges dramatically
raised tuition rates. An example of such tuition hikes
is the University of Colorado where rates rates have
been raised for all of the system's campuses. Tuition
at CU-Boulder will go up by 27.8 percent, from $3,480
to $4,446. Other CU campuses will see a similar increase.
The national average tuition for public universities
is $4,694 per year for in state residents. For freshmen
and sophomore students, the current student loan limit
does not even cover tuition costs.
Because of the restrictions with federal student
loan limits, students and parents will need to become
more diligent in seeking out alternative sources of
college funding.
There are many scholarships available nationwide
that students can apply for. One of the easiest ways
to apply is through the FastWeb
online database. There are also many books available
that list scholarships that students can apply for.
Part time and summer student employment also becomes
more important when education costs rise.
Until the federal government reconsiders raising
the student loan limits, students will become increasingly
dependent upon scholarships, savings and employment.
The lesson for families with children not yet in college
is simple -- start saving early.
Author: Michael Carter is a contributor at
College
Financial Aid Guide, an online informational resource
for educational funding, scholarships and student
loans.
