Evil Private Student Loans
If you or someone you know is going to have to borrow to pay for higher education, please make sure you exhaust all other options before turning to private student loans.
Private student loans (those taken out through private sources like banks without government backing) are one of the biggest rackets going. Just consider some of their finer points:
- Interest rate can be changed at any time for any reason
- They cannot be discharged through bankruptcy
- Origination fees are ridiculous
- Getting them in the student’s name only is difficult
In the confusion of paying for college, it’s easy to mistake private loans for the better alternatives (e.g. PLUS, Stafford, Direct). But these loans will end up costing much more by the time they’re paid off in ten years.
The second point alone should be enough to keep you away from these things. Through some very successful lobbying, banks have convinced our illustrious Congress that they deserve the benefit of special protection.
Private student loans - stay away.
November 20th, 2007 at 9:15 am
Indeed. Ugh. The cost of higher education makes me sad.
January 30th, 2008 at 1:08 am
Great post. I remember when I was deep in debt, a secured loan really helped me but I think you have to be really strict with yourself as once those credit cards are paid off you want to go back out and spend on them. Cut them up!