By Daniel Powell
Since a lot of students do not actually have the money to pay cash for college and aid is generally not enough, many are forced to take out private loans. Most suggest to exhaust all other possible ideas before looking into the private loan market. Many students who decided to take out money through private lenders are now struggling to pay back their loans after school. This comes as no surprise figuring that private loans are the fastest growing form of financial aid for U.S. college students.
Today, private loans account for 25 percent of all student loans. Some even predict that private loan volume will exceed subsidized, federally guaranteed loans by 2010. While these loans do help students to pay for college, some may impose up-front fees equal to 10 percent of the loan and interest rates that could reach as high as 18 percent. Remember that federal loans have a cap to keep the interest reasonable.
It also needs to be known that private lenders can change rates at any time. This means you may start off with a low interest rate that could escalate and make a big change in your overall monthly payment. This payment could become unaffordable depending how well your doing out of school. It is also important to remember that interest on private loans is assessed from day one, and if your not making at least interest only payments then your balance will be much more than when you started.
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Easing The Loan Payback Pain
Private loans can burden U.S. college students