A student in need of financial assistance through college loans in order to meet tuition typically are able to either acquire a federal loan or private student loans that can help meet these costs when other sources of financial assistance, like scholarships and grants, are simply not enough to bring about the full funding that a particular student needs to meet all of their required college expenses. Tuition and books, as an example, are two of the main sources of expenses that students must pay as, obviously, students may be able to budget and save in other areas but when it comes to purchasing textbooks and meeting tuition and fees, there is little room for negotiation and when free sources of financial aid do not meet these costs, loans are sometimes necessary.
However, students who may be looking into private student loans might have found that some lenders are attempting to compete with popular federal loan options in terms of low interest rates, repayment options, and even opportunities for students to have some of their loan forgiven if they pay these debts in a timely manner. While these options will vary from one financial institution to another, there are some individuals who may turn to a private loan despite the fact that federal student loans are typically more popular and accessible for students in a wide range of financial positions.
Yet, there are some concerns that many advisors have when it comes to students using private student loans, from either a bank or a private company, and even the FTC offers warnings against possible deceptive student loan practices that may come from certain sources that are making offers to students in need of further financial assistance to pay college tuition costs. As an example, the FTC outlines certain aspects of private loans that students must look for in order to make sure that there are no questionable practices going on, in terms of a lender’s requirements for private student loan borrowers.
In an article from the FTC it’s stated that students may want to be wary of borrowing as, “Paying for your education is a serious long-term financial obligation; that’s why comparing the costs of different ways of financing your education is so important.” Also, there are some practices that are used by private lenders that may be deceptive when it comes to student loan options and, as a result, students need to be on guard when looking at all of their borrowing options to help with financing a college education. While many major banks that will offer student loans could have various repayment options and requirements, there are some private lenders, according to the FTC and Education Department, that may use a seal or logo that is similar to the Education Department in the hopes of getting students to find a more trustworthy, but the Education Department has stated they do not solicit student borrowers so this is one area where students must research these offers.
Also, any incentives that may be offered or promotions that are advertised should not factor into a student’s decision to borrow with a particular private lender, as again, student loan debt is a serious consideration that must be made and something as simple as gift cards should not sway a borrower’s opinion. While students also need to avoid giving out personal information to student loan solicitors, unless they have thoroughly researched the company through either a consumer protection agency, the Better Business Bureau, or online, but also comparing private student loans to federal loan options, and factoring in repayment opportunities as well, are also necessary before students choose one particular student loan opportunity to help them meet their educational expenses.