The economy is still in the process of recovering from a serious and crisis and one of the hardest hit individuals are university students. Many have had to take out expensive loans in order to finance their education and are unable to secure jobs once they do graduate. As a result some even end up defaulting on their loans.

Student loan default rates went up by around two percent according to the U.S department of Education. The report further states that for every student who graduated and who started paying a loan as of October 2008, 8.9 percent were not paying their loans by the end of 2010. That is an increase of 7 percent of students who have stopped paying their loan in comparison to 2007.

The requirements for obtaining a loan are more difficult than ever before. It is being reported that fewer students of need are able to get Pell Grant loans. Pell Loans are offering less loans as a result of the economy.

Universities and colleges are also being affected. New federal government regulations have been put into place which may result many colleges from access to student aid money as part of a so-called crackdown against schools who are leaving their students with substantial debt without improving their chances of getting a job. The new rules include regulations that for-profit schools have to meet to get access to federal financial aid money. If graduates owe too much of a percentage of their income or too few graduates of a given school are paying back their loans on time, then that school can actually lose access to federal grant and loan money.

Schools which lose access to grant and loan money will not be able to attract as many students. This is very significant because almost ninety percent of a school’s income comes from government aid. The new laws stipulate that schools will be able to receive federal financial aid if more than thirty five percent of students pay off their debts in a timely manner. Moreover, the estimated annual loan payment of a typical graduate must not be larger than 30 percent of the graduate’s discretionary income calculated to be 12 percent of his or her total income.

Minorities and students from low income families will be affected; they will have less access to funding options and thus limiting the schools that they may be able to afford to attend. However, not there are grants available which won’t put a student in debt. Some of these may include grants designated for students studying a particular subject or those who are part of a minority group. Common sources for grants include the federal and state governments, colleges and universities, and public and private organizations.

Some states issue out state specific grant programs. Michigan’s grant programs are designed to assist a cross section of students including general undergraduates, academically gifted students, low income and non-traditional adult students. Florida offers grants for Hispanices, low income students and those with exceptional grades.

Taking out a student loan is a big deal and you need to be aware of all your options before making a final commitment. You do not want to graduate school with a massive loan and discover that you are unable to find a job. Become familiar with the various grants and loans that are available to you.

Author Bio: Written By Jacqueline Isadore – Written By Jacqueline Isadore – Trident University is a Military College with accredited degree programs. Our Online Universities Accredited are WASC Accredited. Our Military Distance Learning programs offers Bachelors, Masters and PhD degrees.

Category: Education
Keywords: student loans, student loan defaults, student debts, student grants, college grants, pell grant