In a recent vote, Congress approved a measure that would freeze interest rates on all federally subsidized student loans for the next year. The measure was approved, with overwhelming support in both houses: The House of Representatives voted for the measure with 373 representatives supporting it and only 52 voting against it, while the Senate approved it 74 to 19.
According to an article in the Washington Post, interest rates on these student loans will stay at 3.4 percent for another year, instead of increasing to 6.8 percent. The vote is expected to affect over seven million students, with an average savings of $1,000 per student.
In Spite of Savings, Tuition Costs Still High
The rising cost of college tuition is affecting millions of students, with student borrowing approaching the trillion dollar mark. Since 1986, college tuition has increased by almost five hundred percent. The rate of inflation over the same time period was only 115 percent.
Due to those increases, two-thirds of college students are taking out loans to cover the cost of attending college. Twenty years ago, only 45 percent of students had to borrow money to finance their education. This change means that the average student now leaves school with $25,000 in debt.
In spite of those high costs, many analysts still claim college is worth the investment. From the time a student starts submitting admission essays for college to the time they graduate, he or she may end up spending tens of thousands of dollars for classes. However, the average rate of return on that investment is a 15.2 percent salary increase per year.
Many students are able to offset the rising cost of education with need-based scholarships and grants. When students complete the FAFSA (Free Application for Federal Student Aid), they have the opportunity to get grants or low-interest loans that are funded by the U.S. government. The conflict between need- and merit-based scholarships is something that many analysts are continuing to debate, according to The Wall Street Journal.
Money Saving Tips
With tuition costs so high, many students have been forced to get creative about how they pay for tuition costs. Here are three ways that you can save money on your college education.
- Choose a school that is close to home: By attending a local institution, you can continue to live at home, thus saving thousands of dollars on room, board and travel costs.
- Enroll in a community college for your first two years: The price of most community colleges is a fraction of the cost of attending a private university or large state school. For example, the cost of attending Columbus State Community College last year was just over $5,000, while Ohio State University costs around $18,000 per year. By attending CSCC for two years, students save $26,192. Many community colleges even have guaranteed transfer courses. With impressive transcripts from a community college, and well-written admissions essays, students can easily transfer into the school of their choice for the final two years. That means that you can get a degree from your preferred school without paying as much for it.
- Consider how a graduate degree can help improve your marketability: Many students avoid graduate degrees because they are too expensive. However, the right graduate degree can be an incredible asset to your future career, and many programs offer their graduate students funding in exchange for being a student teacher.