Discounting those born with a silver spoon in the mouth, prospective students must prepare for a hard grind ahead. Apart from the physiological and mental effort to stay on track, there is a finite requirement for money. Since these sums average close to US$40,000 for the entire course, parents may not be able to finance the student directly. If independent of parents, the sums involved and the life-schedule selected does not give the student the option to take up a well-paying job. At best, he can take on part-time jobs, which tend to be lowly paid. The prudent option, therefore is to take a loan from the Government- called a Federal Loan- or, if a Federal loan student is not available for any reason, from private loan-providers. Federal loans carry the lowest rate of interest, rarely exceeding 7% while other agencies charge from 7% to a cap of 8.25%, depending upon the type of course, degree and duration.
The PLUS Scheme and Related Costs: There is another scheme, which involve parents to an extent. In a country where existing parent-children ties are not necessarily the best, this scheme can be a tie that binds the family to a closer degree. This plan is called the PLUS loans scheme, an acronym for Parent Loans for Undergraduate Students. However, the interest rate in this scheme is not capped at 8.25%; in fact, most PLUS loans start at 8.5%. While selecting a PLUS loan, both parents and the prospective student must look at the direct and indirect costs. Direct costs are Tuition, which has many variables like in or out-of state college, credit hours in an academic session, enrollment status and more. Fees, which may include mandatory charges for facilities, whether used or not and Boarding and Lodging, on or off campus, are the other direct costs. Indirect costs include books and supplies, a computer with associated peripheral costs, cost of transportation and parking, personal expenses like clothing, laundry, haircuts, cell phone and the occasional movie or two. Lastly, the student will want companionship, which will also add to the overheads. On the plus side, PLUS loan student are not based on financial need or income and cannot be refused on any grounds other than criminal history. The amount could be up to 100% of the cost of college and there are many sops that are attached with it, which vary from agency to agency. Thus an extensive study is required before deciding on who the loan is to be taken from, how much and for how long.
The Rip Off: What is generally not known are the hidden costs, which is where the lender makes his money. Firstly, the tenure of the loan. The lender will suggest as long a term as possible, even up to 20
