Educate Yourself: Student Loans and Financial Aid
Student loans and financial aid is absolutely par for the coarse these days when kids go off to college. I don’t know many parents that can afford to pay the entire cost of a college education, so these families fill out a FAFSA to apply for loans. This hasn’t always been the way. Educational loans are a relatively new invention.
We can thank Harvard University for starting the first ever student loan program in 1840. In the beginning stages of student loans the government wasn’t involved at all, they were privately funded. Indiana’s General Assembly passed a law in 1935 that provided student loans to individuals that had excellent test scores on college entrance tests. Indiana University opened the first financial aid office after the law passed and the State formed the Indiana State Financial Aid Association or ISFAA. IFSAA membership grew rapidly as other schools followed Indiana University lead and now the residents of Indiana had a new way to pay for college.
Russia put the first successful satellite in orbit on October 4th, 1957. The reason this fact is important to the history of financial aid is because our federal government realized that we wre in a race to put a man in space with Russia. To win this race the government made sure they would put a plan into place that would make college affordable for every American. ISFAA provided the guidence the federal government needed to put into place a financial aid program to accomplish their goal.
Following World War II, Congress handed down the National Defense Education Act. This specific act introduced the Perkins Loan, an affordable student loan that is offered to low-income college students and provides a 10-year pay back period. That had been the very first federally backed student loan, and more would shortly follow. In 1963 the Health Education Assistance Act furnished loans for college students pursuing degrees in medical and health fields. That was succeeded by what is now known as the Federal Work-Study Program, a system that enables the federal government to pay the wages of working students.
By the conclusion of 1965, Almost all of the student loan programs we use today, such as the Stafford Loan, Work-Study Program, and Perkins Loan, were in place. Since the cost of education and learning continued to increase, the government introduced the Parent’s PLUS loan program in 1981, a plan that granted higher-income households to get help in paying for school. These days, these types of loan programs permit many college students to go after an education when they might otherwise be unable to, making them a priceless resource to our country as we struggle to carry on as a worldwide leader.
Tags: loan
