An article in the Wall Street Journal describes the situations faced by families who have seen their wealth decrease due to factors related to the recession – but who still have sky-high university bills to pay.
For example, Washington real estate agent Jane Sawyer told the news provider that a combination of falling house sales, rising expenses and unexpected medical bills has called into question her ability to keep her son at the University of Chicago.
“I’m trying really hard so he doesn’t graduate with a mountain of debt,” she explained. Sawyer said she is exploring a number of options, including a loan from a family member.
Figures from the College Board reveal that the number of families utilizing private student loans has grown significantly over the past decade.
However, if you are considering taking out a private loan to finance your college education, experts advise you go in with your eyes open to make the best choices.
Unlike Federal loans, private student loans have a variable interest rate, meaning that it changes in line with market conditions. What started off as a great deal could change down the line.
Also, private lenders will base the interest rate on your credit score, which takes into account factors such as payment history and how much credit card debt you regularly maintain. If you don’t have a sufficient credit history, you will probably need a cosigner for the loan.
Keep in mind that private student loans have also been hit by the credit crunch, which may make them more difficult to come by unless the borrower has good – or outstanding – credit.
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