University graduates who bet on the future in private student loans
With the dramatic increase in fees charged by many universities, students are considering taking the most uncertain path to meet payment requirements. And the risky path is none other than private student loans. As these loans are related to credit card debt, they are not only risky but also fraught with problems.
When talking about the danger of this option, the first point that comes to mind is that the interest rate on private student loans varies. According to a report called The Project on Student Debt, college students who took out these loans in the 2003-04 academic year at an interest rate of 5% got similar loans at 14% in the 2007-08 academic year. It was clearly mentioned in the report that more than two-thirds of people who borrowed privately did not enjoy the benefits of what is considered cheaper and safer: federal loans. Now, this aspect is disappointing.
Most students choose to graduate with a degree in their field of interest, but very few successfully find their way 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 or not her degrees were worth what she is currently experiencing. Just three years after graduating from law school, she’s completely broke. With the banks calling her from time to time, she owes an amount of around $250,000.
According to Lauren Asher, president of the Institute for College Access and Success (organization behind the Student Debt Project), college students deserve more protection. The federal government needs to take certain necessary steps. She also said that students should avoid taking out private student loans; particularly when federal loans are affordable to students, that is, they are cheap.
In addition to the fact that private student loan forgiveness for bankruptcy claims is fraught with problems, private loans come with several other drawbacks: students applying for private loans do not meet the eligibility criteria for payment deferment programs, loan forgiveness programs or payment options based on income
Remember, your present shapes your future. Therefore, if you want to have a better future, it is very important to make the right decisions at the right time. And private loans are certainly not an ideal option, especially when it comes to securing your own future.