Given how expensive college is these days, many students have no choice but to borrow money to fund their degrees. If that’s the route you’re planning to take, you should know that not all student loans are created equal — and that borrowing privately for college is a move that you may end up regretting.
When it comes to borrowing for college, you have two choices — you can take out federal student loans, which the U.S. Department of Education oversees, or you can take out private loans, which aren’t regulated by a government agency. Here’s why private loans may not be your best choice.
The higher the interest rate attached to your student loans, the more that debt will cost you to pay off. Federal student loan interest is capped at preset rates. Federal Direct Subsidized Loans and Direct Unsubsidized Loans have a fixed rate of 4.53% for loans disbursed in mid-2019 through mid-2020. But with private loans, you could easily be looking at double the interest.
Furthermore, federal loans have a fixed interest rate, so you don’t have to worry about that rate climbing during your repayment period. Continue reading “Why Are Private Loans Such a Bad Choice for College Students?”