With the dramatic increase in the fees charged by many colleges, students are considering to walk on the most uncertain path to satisfy the payment requirements. And the risky path is none other than private student loans. As these loans are related to credit card debt, these are not only risky but full of trouble as well.
When talking about the danger involved in this option, the first point that comes in mind is that the interest rate for private student loans varies. According to a report called The Project on Student Debt, undergraduates who took out these loans in the educational year 2003-04 at an interest rate of 5% secured similar loans at 14% in the academic year 2007-08. It was clearly mentioned in the report that over two-thirds of the individuals who borrowed on a private basis did not enjoy the benefits of what is regarded cheaper and more secure- the federal loans. Now, this aspect is a disappointing one.
A majority of students choose to graduate with a degree in the subject of their interest but a very few make their way successfully into the job market. Kristin Schlaud, who earned a law degree from Wayne State University and a master’s degree in commercial real estate from John Marshall Law School, doubts whether her degrees were worth what she is experiencing at present or not. Just three years after law school, she is completely ruined. With banks ringing her every now and then, she owes an amount of around $250,000.
According to Lauren Asher, the President of the Institute for College Access & Success (organization behind the Project on Student Debt), college students deserve more protection. The federal government needs to take certain necessary measures. She also told that the students should avoid taking private student loans; particularly when the federal loans are within the reach of students i.e. cheap.
Besides the fact that discharge of private student loans on claims of bankruptcy is full of trouble, private loans accompany several other demerits: students taking out private loans do not meet the eligibility criteria for payment postponement programs, loan forgiveness programs or repayment options on the basis of income.
Remember, your present shapes your future. So, if you wish to have a brighter future, taking right decisions in the right time is very important. And private loans are certainly not an ideal option, especially when it comes to securing your own future.
Source by Sheila Danzig