Questions over assistance when it comes to repaying private student loans have often arisen as many college graduates who have this kind of debt as students are in a position where, when college loans are in place, discharging these debts through actions such as bankruptcy is not an option, despite the fact that we are seeing many graduates with a variety of student loans in place face financial hardship. Yet, when it comes to repayment assistance on student loans, the borrower who is seeking forgiveness may not have many options available as private loans are in a position where a lender may be able to set certain terms or decide what options are available if problems do indeed arise.
Yet, the argument over federal student loans versus private student loans is one that has been ongoing, particularly as of late when we are seeing student loan debt rise to levels that have not been seen in the past, with some predictions indicating that this type of debt will reach $1 trillion in 2011. Obviously, students in a variety of situations are having to pay back debt but some are in the extreme situation where hundreds of thousands of dollars may be owed, and when private loans are in place many students find that there may not be as many forgiveness, assistance, or even forbearance options that are in place when federal loans are borrowed.
Many students who borrow private loans have often found that, in some cases, they may be comparable to federal loans in certain conditions but this does not mean that opportunity for forgiveness will be made available nor are borrowers in a position where rates will be fixed in many cases and, as a result, the rate could be much higher when a student begins to repay these are than they had originally expected. Furthermore, in cases where students may be using these private loans as a way to pay for a for-profit college, like an online university, we have seen problems in this area as the defaults are much higher for graduates of these institutions, and this is obviously putting students in a position where they may not have gotten a quality education that will help them find employment after graduation and they are also stuck with debt.
While there have been some changes in federal student loans, many still argue that students are in a better position to borrow federal loans, if loans are used at all, as these private student loans may be more difficult to repay, might not come with assistance options if financial distress arises, and again could be much costlier due to interest rates. Yet, students who are in a position where they are having to pay back private student loans may want to talk with their lender about assistance plans as even those who do graduate with this type of debt may have options available from their lender to help them avoid a great deal of financial problems if they cannot pay this loan under the original terms.
In essence though, while many advisers often suggest that students avoid private loans, borrowing in general to pay for college has often been advised as what many students need to look at last when they are researching the financial resources, as debt can be easily acquired by students and, as we have seen lately, may not be easily repaid.