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As students prepare to go to college, many realize that they do not have the resources to meet the rising costs of college tuition and other related expenses. Families must also face the fact that financial aid isn't going to meet the gap between what they feel they can afford to pay and what's available to them.
There are some students who have been awarded all of the need-based aid that’s available and still have a significant portion of their cost of attendance that won't be covered. Some of the reasons why many students still have costs to cover include:
- the student may have applied for financial aid late;
- the student may have a stepparent with considerable assets that isn't going to contribute; or
- the student may be estranged from his or her parents in a situation that doesn't justify a dependency override.
Alternative loans remain the most popular method of closing the gap of unmet need with both families and aid administrators; however, additional debt is not always the best option for the student.
Statistics show that borrowing in the Stafford Loan Program has increased by $20 billion since 1990. The grant-to-loan ratio has also changed significantly. In 1990, nearly two dollars of grant aid was provided to students attending public universities for every dollar of loans borrowed. In 2000, the ratio dropped to nearly 1:1.
The average indebtedness for students attending Illinois public four-year universities is $13,944 and students attending Illinois private universities is $16,485.
With rising loan debt and with students incurring credit card debt, what are the alternatives besides student borrowing? Students may consider:
Parents may consider:
- 529 plans; and
- payment plans offered at many colleges.
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