Private Student Loan
Private Student Loan
According to the New America Foundation one in five students who take out a private student loan fail to exhaust their federal loan options. This hard fact can have devastating consequences for students who exit their collegiate career with one or more private student loan at 10 percent interest (compared to a federal loan at three or four percent).
New America also claims the private student loan industry is the fastest growing form of college aid at this time. Far surpassing the tight budgets and guidelines of programs offered by the U.S. Department of Education, private student loans currently account for approximately 25 percent of all student loans. Compare that to 10 years ago when private loans were virtually nonexistent for students, and the impact of becomes clearer. Today, financial aid experts forecast the rise of private student loan usage to exceed federal subsidized loans by 2010. That is a far cry from “virtually nonexistent” in 1998.
The increase in usage of private student loans is no mystery. Many students find their federal and state financial aid lagging behind their college tuition and expenses. Tuition and living expenses have increased drastically in recent years while federal financial aid for college limits has moved just above stagnate. There is an abundant of private lenders willing to extend funds to students with approved credit. On iStudentLoan we feature a single private student loan lender.
The private student loan sector certainly has its place in today’s market. Financial aid experts, however, worry about students not tapping out their potential in the less expensive federal student aid before turning to private lenders. Unlike federal loans private education loans don’t feature capped interest rates or up-front loan fees. Federal loan programs also feature insured loans in the event of a death or permanent disability. The government also offers a consolidation program for students to combine their loans after graduation. The program, unlike private consolidation, operates under mandated interest rate charges. Visit our main blog page here
It is always wise to exhaust all your Federal Aid efforts before applying for any private student loan.