Private loans for students can become traps
By Kara McGuire
Star Tribune, Sunday September 27th, 2009
Summary: Student loans can be confusing and end up costing a person more in the long run. The term “private student loans” is sometimes used to refer to Federal Family Education Loan Program (FFEL), which can be very confusing. FFEL are the government student-loan programs that are administered by private companies, such as Wells Fargo. Some private loans work more like credit cards. These loans have far fewer protections and guarantees for borrowers than do government-sponsored loans. According to a policy paper by financial aid expert Mark Kantrowitz, private loan volume grew from $7.7 billion in 2003-2004 to $22.4 billion in 2007-2008. Unfortunately, college graduates with too much student loan debt cannot, in most cases, discharge the loans in bankruptcy. Not only that, but these private loans aren’t included in any of the recent laws passed to make college more affordable. The laws passed include income-based repayment plans and loan forgiveness for certain altruistic occupations. One of the only options a student has is to call their lender to explore their options if they are having problems repaying their debt. Also, one tip before taking out a student loan is to calculate how much debt you can afford to repay first.
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Loans and debts are scary subjects to me, especially when they are likened to credit cards. Is there an organization or a department students all over the nation can call if they have student loan questions? If there isn't, it seems like there should be. Good summary, Michelle. You included a lot of facts.
ReplyDeleteLoans are always hard, because you HAVE to get them, but then you end up in debt and it's all bad. Especially if you plan on going into something that doesn't pay much, like teaching, even though logic tells you try for something with more pay.
ReplyDeleteI am scared about loans, so I refuse to every take out any. It's going to take me longer to finish school, and I already had to miss a year. But I think in the long run it will be worth it. I went to school from 07-08, took a year off, saved money, and came back this semester. I'll take another year off, then go back. It may take me like 6 years to get a bachelors but I'll feel free. I really think it will be worth it.
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