Smart Borrower Blog

Archive for the ‘Private Student Loans’ Category

Is That All She Wrote for Private Student Loan Lenders?

The Student Aid and Fiscal Responsibility Act, currently moving through Congress, would stop the FFELP (Federal Family Education Loan Program). The FFELP has allowed third party (private) lenders to issue student loans which are backed by the government. In 1992, the Federal Direct Student Loan Program began, which allowed parents and students to borrow directly from the U.S. Department of Education without a FFELP lender or involvement from a bank. If the Student Aid and Fiscal Responsibility Act is passed by Senate vote, critics of the act argue that it will put most private student loan lenders out of business... more »

Ten Percent of Community College Students Do Not Have Access to Federal Student Loans

According to the Project on Student Debt, there are about 900,000 students at community colleges in 31 states who do not have access to federal student loans because their colleges do not participate in federal loan programs. What’s more, 362,000 community college students (2 out of 3 students) who do have access to federal loan programs took out private student loans during the 2007-2008 school year, instead of using the more affordable and safer federal student loan options. This decision to fund education with private student loans may be due to deceptive marketing practices of some private lenders, as well... more »

Student Aid and Fiscal Responsibility Act Ends Government-Backed Private Student Loans

In the past, the federal government guaranteed student loans that were financed by private lenders. Recently, the U.S. House approved a money-saving move that will stop guaranteeing private lender loans and replace them with student loans that are financed through Treasury funds and that are therefore less expensive. This will save the government an estimated $80 billion over a 10 year period. How will the government use the $80 bill in savings? The savings are meant to provide larger grants and more grants to lower-income students for their college expenses, and to increase federal aid available to community college students.... more »

The Need for Student Loan Consumer Protections

The federal student loan system has become fundamentally predatory due to the Congressional removal of standard consumer protections, combined with Congressionally-sanctioned collection powers that are stronger than those associated with all other loan instruments in our nation’s history. These actions by Congress have, predictably, created an inherently predatory, state-sponsored lending and collection system where the motivations of the various functional elements of the system are fatally misdirected. The system promotes inefficiency in administration, unchecked inflation, bureaucratic malaise and conflicted oversight. Moreover, the resulting set up also promotes needless and expensive complexity and redundancies, fails to encourage academic excellence, and ultimately,... more »

Most Students Are Not ‘Drowning in Debt’

Contrary to some flashy news stories, most U.S. college students are not graduating from college with excessive student loans, according to a story from U.S. News & World Report. A new study from the College Board, admittedly designed to “take down a notch the sensationalist stories about students drowning in debt,” according to study author Patricia Steele, found that a full third of June 2008 graduates completed their degrees with no outstanding government or private student loans. And only 10 percent of all graduates of four-year colleges had more than $40,000 in such loans at the end of their college... more »