On the recordAugust 1, 2012
As August begins, millions of young people across the country are preparing to head off to college. Fall brings not only a return to course selection and roommates and football games but also to high college tuition bills. In my home State of Pennsylvania, the average cost of tuition and fees tops $12,000 for a public 4-year school and $32,000 a year for a private university. These high costs force 70 percent of Pennsylvania college students to take out student loans. One of the biggest decisions facing students and college graduates is not just the amounts they borrow but who their lenders will be and whether they will be private lenders or Federal loans. Federal loans are simply a better deal. They offer lower, fixed interest rates, consumer protections and manageable repayment options. Private student loans, on the other hand, typically have uncapped, variable rates, hefty fees and few consumer protections. From 2001 to 2008, the private student loan market exploded, increasing from $5 billion to $20 billion. Lenders loosened underwriting standards and often cut school financial aid offices out of the process. While students may need private loans, they should know the differences between private lenders and Federal loans and be fully informed of the differences in cost and obligation.…
