Even here at the beginning of July there are some students who are still unsure of whether they will have to borrow to meet tuition costs in the fall of 2011 or if there are still scholarship opportunities that may be available to help them pay for school, but there are indications that more students may still turn to loans as a way to help them through college, due to the fact that the amount of college loan debt which has been acquired in the past has increased and college costs are also on the rise. Sadly, this has led to some students simply being unable to either make their scholarship and grant funds stretch to meet all of their college financial needs, so as a result, there are more students who may feel that loans are their only option.
Yet, private student loans are attempting to get more of a share of these borrowers due to the fact that changes in legislation and federal student loans may have cut down on the amount of student loan interest payment income financial institutions may have seen in the past. Yet, student loans from private lenders are also looking to offer a affordable rates on their loans as a way to compete with federal loans that can come with rates of around 6.8% for traditional Stafford loans, and there are also affordable federal consolidation loans that students may be able to take advantage of after graduation as well.
When it comes to private student loans, there are some lenders who are advertising rates as low as 3.4% or in a range that may begin as low as 5% or 6%, and this is a draw to many students who feel that this may be a more affordable option. However, it’s because of these advertised rates that students are being heavily advised to compare student loan rates and overall costs before borrowing. Obviously, interest rates are one of the first aspects of a student loan that needs to be reviewed but repayment assistance plans, forgiveness options, or other perks that may come from certain lenders should also to be looked over as well.
Private loans are venturing into more areas similar to federal loans, like forgiveness options or affordable interest rates, but students need to understand that some of the rates that are advertised on private student loans are variable and could increase at a later date. There are some lenders that do offer fixed-rate options, but these rates should also be reviewed as well due to the fact that there may be certain fees that are associated with private student loans which could make them less affordable than a federal option.
No student plans to graduate from college and face a troubling employment situation, but this has been the case for graduates here in 2011, so students who are in a bad position and have no way of finding affordability on their student loan payments may be on their way to doing damage to their financial situation if this potential problem is not planned for. While the benefits of federal student loans in the area of forgiveness and affordable monthly payments for the financially distressed have been well documented, aside from private student loan interest rates, students do need to make sure that if financial problems arise, their private student loan lender can offer them assistance until they get back on their feet and can resume paying their loan.