About Free Education
Every year, a number of people have to take out private or federal education loans to cover their tuition fees, course materials and daily living expenses bound up with attending a college/university. If you are a college student (or to-be student) and find yourself unable to afford your college education, then you should equip yourself with various types of education loans available to help ensure you get the best possible deal.
After all, any debt you get into while in school is perhaps to stay with you for the next 10 years at the very least. In some cases, it would take over 25 years for students to pay off education loans, which is a huge portion of their working life. Doubtful about it? Let’s figure out how interest works on education loans.
When getting an education loan (whether from federal government or private financial institutions), you will be quoted an interest rate. This is the percent of the loan balance that you are charged per year. For instance, currently unsubsidized Stafford loans have an interest rate of 6.8 percent. This means that you have to pay $68 in interest annually for each $1,000 of the loan that has not yet been paid back.
Be aware that the amount of interest is subject to vary based on the loan balance and how much time has slipped since your previous payment. To figure out the interest fees, multiply daily interest rate by the number of days since the last payment. And then multiply that result by the previous loan balance.
The daily interest rate is the annual rate split by 365.25. Thus, a loan with an annual rate of 6.8% has a daily rate of 0.0186% or 0.000186 when expressed as decimal. If 30 days have passed since the last payment and your previous loan balance was $13.295, you would be charged an interest rate of $74.19.
If interest has been accumulating on your balance during a period when you didn’t have to make payments, the interest will capitalize at the end of the period. This means that the amount of interest that has accrued will be added to the loan balance. Interest calculations later will depend on the new loan balance rather than the balance before interest was capitalized.
Now, you might want to ensure you are paying little or even 0% interest. Unfortunately, there are no standard education loans with 0% interest. However, there is still a way for students to find an interest-free educational loan. That is to get an interest-free loan from non-profit organizations such as religious organizations, ethnic societies, local community foundations, charities and college’s community foundations.
Here are some examples:
• Bill Raskob Foundation
This is a small family foundation, offering loans to around 60 sophomores, juniors or seniors, with the minimum education loan amount of $1,000 and average loan amount of $2,000. Be noted that most loans offered from this foundation range from $3,000 to $5,000.
• Central Scholarship Bureau of Maryland
This bureau offers interest-free loans and grants of up to $10,000 to about 150 Marylanders who attend accredited institutions within the United States. To gain these loans, borrowers are required to find an adult to cosign or commit to repay the loan.
• Evalee C. Schwarz Charitable Trust for Education
This organization offers interest-free loans to undergraduate and graduate students who display exceptional academic performance and significant financial needs. High school seniors may also qualify for a loan.
• Military Officers Association of America (MOAA) Scholarship Fund
MOAA offers interest-free loans, scholarships and grants for students seeking undergraduate degrees. To receive this benefit, students must be the children of active or retired military members and have a grade point average of at least 3.0.
• Leo S. Rowe Pan American Fund
Also known as Rowe Fund, it is an educational loan program of the Organization of American States (OAS). The Fund offers interest-free loans for up to $15,000 to Latin America and Caribbean residents to finance their education in accredited universities nationwide.
If you unfortunately can’t get any help from this route, then you may have to take out an educational loan that will accrue interest. Under this circumstances, the federal loans are usually the best. Though they are not interest-free, some of these loans have interest-free periods on offer.
For example, for subsidized Stafford loans, the government covers all interest while students are in school or in an authorized period of deferment. After the period is over, borrowers need to make interest payments. Some loans like Perkins Loans will even be “forgiven”, if borrowers are engaged to certain jobs like teachers in low-income areas.
In recent years, the costs for secondary education have significantly increased and seem to continue to rise. Due to this, it is getting harder and harder for students and parents to afford a college education. However, don’t let this stop you from going after your goals of pursuing education. A variety of grants are available to assist you in covering the costs related to attending a college.