A thing or two you should know about private student loans
Jul 11, 2012 by Michael Murphy | 0 Comments
Here in the Financial Aid Office we spend virtually all of our free time discussing the advantages of certain types of financial aid. Joel is a sucker for grants while I am a die hard merit-based scholarship fan. Debates often get heated and occasionally create fiery, yet temporary, rifts right down the middle of our office. One thing we always find ourselves in agreement on, though, is student loans. As an office, it is standard protocol to offer students the government-backed, Unsubsidized Direct Loans before any other type of loan. I sense that the entirety of our broad readership is wondering the same questions: why are federal loans better than private loans? What ever happened to the free market??
A wise man names Chris Neiger recently wrote a very compelling article that outlines the primary benefits of a government loan over a student loan. I'll list his main points below and then give the link to his article so you can read for yourself.
Reasons why private loans may be less advantageous than federal loans
- You're going to pay more in interest rates and fees
- Can't be canceled or forgiven
- If you lose your job, you may be on your own
- Income-Based Repayment not an option
Even though I've already read the article twice, I've been so re-intrigued by just typing out those points that I think I'll have another read. Here's the link the article on Investopedia.com:
It's a long link, so you know the content must be juicy.