What Are Title IV Educational Loans?
At one point in our country's history, a college education was only for the wealthy and affluent who could afford to spend huge sums on their children's education. Thanks to Title IV educational loans, higher education is now available not just to the few who can afford to pay upfront, but also to hard-working students who come from more modest backgrounds. Visit your school's financial aid offices to find out how you specifically can benefit from educational financial aid available through the government.
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Significance
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Title IV educational loans are so named because they come from Title IV of the Higher Education Act, or HEA. The fact that the government provides economic help for students wishing to engage in a course of study in a higher education setting establishes the idea that the government, at least as it is viewed in the United States, has a vested state interest in the education of its constituents.
History
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The HEA was signed into law by President Lyndon B. Johnson in 1965. The Title IV section on student assistance and federal financial aid has always been part of the language of the law, even though the law has been revised over the years. Since its inception, the HEA comes to Congress every five years for reauthorization so that any necessary changes may be made to the bill.
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Function
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The purpose of Title IV of the HEA is to provide the funding which makes secondary education available to students which are deemed eligible by the government. Eligible students must be enrolled or accepted by a secondary learning institution, be a legal resident of the United States and file an application with the Secretary of Education's offices which states their educational purposes and includes the person's Social Security number.
Types
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The fundamental Title IV educational loan is known as the Federal Undergraduate Stafford Loan; students currently enrolled in an institution and attending toward a bachelor's degree are eligible for this type of loan. Stafford loans may be subsidized, which indicates that the government has elected to pay interest for the student, lessening their financial burden after graduation. The Federal Graduate Stafford Loan is available to students attending an institution toward a graduate degree, and can offer from double to ten times as much as an undergraduate Stafford loan offers.
Although Stafford loans are taken out in the student's name, Federal PLUS (Parent Loan for Undergraduate Students) loans are taken out in their parents' names. While maximum Stafford loan amounts are decided upon by the Department of Education, individual colleges determine what the maximum amount of Federal PLUS loan funding a student should receive. The Federal Consolidation Loan program, also available through HEA, can consolidate multiple educational loans to make monthly payments more affordable.
Considerations
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To obtain any governmental financial assistance, either loans or grants, a student must submit the Free Application for Federal Student Aid, or FAFSA, to the Department of Education. The FAFSA can be submitted at the earliest on January 1 of the calendar year for which the funds will be applied; a student who needs aid for the 2013-14 school year can submit their FAFSA on January 1, 2013. Although Parent PLUS loans increase the financial burden on parents, interest rates are usually much lower for these than alternative education loans from private banks.
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