When it comes to borrowing student loans for college, many students who are attempting to find affordable loans often seek out federal assistance, but there are arguments that private student loan programs that offer this particular form of aid to meet college tuition costs are becoming more affordable, helpful with repayments, and a competitive option for federal student loans. Obviously, students typically would turn to federal loans in the past as they brought some of the lowest interest rates and a variety of options for repayment after a student had graduated, but there are mixed opinions on whether private student loans have actually begun to change in a way that can offer an affordable alternative, or if federal loans may still be the best option.
Federal student loans have always been one of the more affordable plans for students who must borrow to meet college tuition costs as, again, interest rates on these loans have typically been quite low, consolidation options for federal loans have brought affordability after graduation when it comes time to repay, and even recent programs like income-based repayment options have been put in place to help students meet their monthly payment obligation when they graduate and their financial situation may not allow for them to meet the minimum payment on these loans. However, there are also plans from federal loans that offer the forgiveness of student loan debt for a graduate who, for instance, is working in a public service field, which can be greatly helpful for students with a sizable amount of debt.
Yet, an article on SmartMoney.com has stated that some private lenders are offering lower rates, easier repayment opportunities, and there are even loan programs that, “…forgives 25% of the original balance for students who graduate and make every payment on time.” Obviously, the forgiveness of student loan debt is a major draw for many borrowers as the costs of attending a college or university are on the rise and, as a result, many students are in need of these loans to supplement financial aid that may come from student scholarships and grants, but might not meet the entirety of their financial obligations.
There are some educational institutions that will be offering more student loans in the coming semesters as financial aid sources are being reduced due to budgetary cutbacks from federal and state programs. It goes without saying that students would rather avoid borrowing to pay college costs, but if student loans are necessary, financial aid counselors advise that the students who must borrow heavily research the options that may be available from both federal and private loans. While there are, again, some student loan offers from private lenders that are attempting to mirror some of the benefits gained through federal student loan borrowing, there may be higher rates or fees and longer repayment time frames associated with private loans, so comparing the overall costs one will meet when repaying will be one of the safest ways to ensure that a particular loan will be in a student’s best financial interest before borrowing.