Student loans break the bank

Senior Brittany Ivy was worried about how she was going to pay for college at IU.\n"My parents hadn't set aside any money to pay for college so I had to decide on my own how I was going to pay for it," she said.\nWhen she started attending IU, Ivy said she realized housing was one of the biggest expenses, so she became a Residential Adviser, which provides free housing. But the cost of tuition, books and the "million other fees" of attending IU required her to take out a Stafford loan.\nThough private schools like Yale, Notre Dame and Columbia are known for their pricey bills, tuition for Big Ten schools like IU, Pennsylvania State University, Northwestern University and the University of Wisconsin, can add up to nearly $30,000 annually for out-of-state, incoming freshmen. Costs vary depending on number of credit hours, living situations and meal plans.\nThe federal government recognized this problem and provides many ways to help students pay for their college costs. In fact, the federal government is responsible for more than 75 percent of student aid in the United States through programs like Federal Pell grants, Federal Supplemental Educational Opportunity grants, Federal Stafford loans, Parent Loans for Undergraduate Students, Federal Perkins loans and a work-study program.\nFederal Pell grants are a common financial option for undergraduates. The College Board estimates that more than 3.7 million students receive some sort of a Pell Grant. \nThe Federal Supplemental Educational Opportunity grants program is one of three federal campus-based programs. The federal government funds the program, but gives the money to schools to use under their discretion. About 1 million students receive funds from this program each year. It provides grants to undergraduates with extreme financial need. Priority is given to those who receive Pell grants. Students can receive between $100 and $4,000. Students must be U.S. citizens enrolled at least half-time in an undergraduate program at an accredited institution.\nThe Federal Stafford loan is a guaranteed student loan that boasts a low interest level to graduate and undergraduate students without regard to financial need. Through this program, students can borrow money for educational expenses directly from banks, credit unions and other commercial lenders. Nearly 5 million students receive Stafford loans annually. The level of the loan depends upon the student's dependency and the amount of time enrolled in an accredited college or university.\nThe two types of Stafford loans are subsidized and unsubsidized. The government pays for interest collected on subsidized loans, given to students with a demonstrated financial need, while the students are in school.\nIvy found out about the benefits of using a Stafford loan from the bursar. \n"If you don't want all the money, you can ask them to reduce the amount," Ivy said. "I don't have to worry about paying more than I need to."\nUnsubsidized loans are awarded to students who have not demonstrated any financial need and thus must pay interest while in school. With both subsidized and unsubsidized loans, the principal, or initial amount of the loan without interest, must be paid off within six months after graduation.\nThe Parent Loan for Undergraduate Students allows students' parents to borrow up to the total cost of their child's tuition. The interest rate on these loans varies annually, adjusted July 1, but because of usury laws, must not exceed 9 percent. Though parents do not need to demonstrate a financial need, they must show a good credit history. There are two levels of PLUS loans: direct and the Family Federal Education Loan. Parents may apply for both of these loans if they have more than one child in the family with the same enrollment period. There is a minimal annual payment of $600.\nThe Perkins loan is another campus-based program. This program provides financial aid to students with significant financial need. To be eligible, students must have applied for a Pell grant. The unique quality of this loan lies in the relaxed payment requirements and its low interest rate. Currently, the interest rate is at 5 percent, the lowest of any education loan. Students are not required to pay back the loan while in school and are given a grace period of nine months after graduation or drop-out to start paying off the loan. Typically, depending on need, an undergraduate can receive as much as $3,000 annually for a maximum of five years. \nThe final federal option is the work-study program. This campus-based program gives students with demonstrated need, both graduate and undergraduate, job opportunities based on financial need.\nSenior Michelle Batchik is a health administration student with a work-study position as a receptionist at the Center for Human Growth and the Institute for Child Studies. She applied for the job when she met the financial requirements for work-study last fall.\n"It works for me because it completes one of my requirements for an internship," Batchik said.\nThough there are numerous options in providing for a college career, many students are either ignorant of the options or are fearful of going into a seemingly large amount of debt. \nKarl Nielsen, principal of Christian Heritage High School in Trumbull, Conn.,, said, "We try to encourage students to get beyond the label of debt and understand that it is normal for an individual to receive financial aid." \nHe said looking for loans involves weighing the costs and benefits.\n"I took out a loan and will be finished paying it in a couple years, and I live quite comfortably," Nielsen said. "I do not think that would be the case had I chosen not to pursue a college career." \nNielsen previously served as the school's college guidance counselor. He said that this was one of the most discussed topics in the counseling process. \n"There are answers. It is just a matter of doing a little research"