As we have discussed on this blog many times, student loans can be a financial thorn in the side of many debtors. There are nearly impossible to discharge and they eat away at debtor’s assets for years after they’ve graduated from college. But there’s something else fishy about student loans that many students need to be wary of…private student loans. Many students assume that when they take out a student loan that they are getting a federal loan but that’s not always the case and you need to read the fine print because the difference can be dangerous to your financial health.
Federally guaranteed student loans have fixed interest rates, currently 6% to 6.8%. Private student loans on the other hand have interest rates comparable to a subprime credit card, running 15% or more and that’s not including the fees they hit you with.
Students need to be cautious and avoid private student loans; they are costly and can destroy you financially. It is unfortunate that students, some as young as 18 years old are not being told about the true costs of student loans upfront before they sign the papers. The government requires other lenders, such as mortgage lenders and car financers to fully disclose the true cost of the loan before the borrower signs any papers, why not students?
If you are a student or recent graduate overwhelmed by student loan debt and other debts contact a bankruptcy attorney today to find out how you can reorganize your debt and maybe even discharge some non-student loan debt in bankruptcy. Taking action now may make it easier for you to repay your student loans and protect more of your assets.