Obama To The Rescue On Federal Student Loans, But What About Private Loans? – Eva Pereira (Forbes)
November 1, 2011
“Obama’s new studentloanreliefplan makes federal debt burdens manageable, but what’s to be done about private debt? A sizeable chunk of education debt is owed to private lenders, who charge far higher interest rates and promise none of the borrower protections that come with federal loans. As of 2010, there’s an estimated $168 billioninoutstandingprivateloans. The new Consumer Financial Protection Bureau (CFPB) aims to make the education lending market much more transparent with its KnowBeforeYouOwe project, but for those already knee deep private debt, there is little recourse. Several distressed borrowers shared their private loan struggles on a recent call organized by the AmericansforFinancialReform, a consumer rights coalition. All were first-generation college students from either single parent or low-income families, who turned to private loans to cover costs for their college education. ‘My mom didn’t go to college and my school’s financial aid office was the only place I could turn for advice. They made the private loans sound like a great deal’ said Stephanie Holstein. … Cheri Parrag from Sarasota, FL took out $30,000 in federal loans and $100,000 in private loans to attend her dream school, NYU. At the time, her parents had just filed for bankruptcy, making them ineligible for federal Parent Plus loans. She turned to private lenders to cover the remaining costs. … Valisha Cooks from Los Angeles, CA took out $41,000 in federal loans and $36,000 in private loans to finance her college education. She started at community college, eventually graduating from a for-profit college. As the first woman in her family to attend college, she says, ‘I had no guidance growing up. I relied heavily on the financial aid office to tell me how I was supposed to pay for it.’” Click here for more.