Private student loans are a debated topic among financial aid advisors due to the fact that they can help meet tuition costs but are usually quite unfavorable for students and can cause a great deal of distress if a student is unable to repay this particular debt obligation. A new proposal was recently introduced in Congress, but has yet to move on from being in committee, but essentially, one of the major parts of these proposals centers around the ability of private student loans to be discharged if the borrower files bankruptcy. Currently, student loans cannot be discharged if the borrower files for bankruptcy, but this has obviously created difficult situations for some students as certain private student loans come with a variable interest rate and may be more costly to students after graduation or can be incredibly burdensome if financial problems arise to the point that a borrower must turn to bankruptcy.
While these changes could be beneficial for some students, as it would obviously be helpful for students who have to file bankruptcy and have these private loans in place, but there are still questions as to whether these simple changes would do enough to guard borrowers against problems which have arisen with private loans in general. While the entirety of the student loan industry has created problems for graduates, due to the fact that rising tuition costs have necessitated more students borrow, which has led to an incredible amount of debt that is being shouldered at the present time, there are those who feel that even if this legislation is passed, more should be done to combat the high costs associated with attending a college or university, and many are crying out for further strides be made in the area of scholarship and grant funding.
Some of the problems that many have found related to private student loans typically center around the interest rate and the few options that are available when it comes to the ability of students to find more affordable payments if financial problems do arise. While there are few people who feel that student borrowing should be a priority, but rather scholarship and grant searches should take up the most of a student’s financial aid application efforts, federal loans at least allow for income-based repayment plans, forbearance, or even debt consolidation options at a low, fixed interest rate if a student finds that meeting minimum payments on these loans happens to be too difficult.
The cost of college is becoming more burdensome but it’s hoped that students will begin finding more access to free sources of financial assistance, mainly scholarships and grants, and meeting college tuition costs out-of-pocket has become almost impossible for many. When it comes to borrowing loans though, students must make sure that they have explored all routes available to them in terms of scholarship and grant assistance so that if they do have to seek out loans they will be able to keep this debt at a minimum. Some go a step further though and say that students must opt for federal loans primarily, as these student loans do allow for more affordable repayment options and even forgiveness for certain graduates who qualify.