Are Private Student Loans Dead?

Are Private Student Loans Dead?

Loans are required by one and all to compensate for their shortage of funds and help them tide over a financial crisis. It is the same with the education fraternity too. There are many brilliant academicians whose families just do not have the wherewithal to help them to pursue with their studies. It is the student loan which helps these needy students to get hold of money that is required for undertaking their education. After the student has completed their studies, they are supposed to pay back this loan which is provided at low rates of interest.

These loans are generally provided by both the government and also by private financial institutions. The amount of student loans being given by the private sector is exceeding that being provided by the government quite rapidly. It is estimated that in about a decade the private sector will go ahead of the government in providing student loans if the current rate of growth is taken into factor.

The fees that are being charged by a number of private lenders can increase the loan costs significantly. It is also true that those private lenders, who do not charge fees, make up for the same by charging higher interest fees. The Senate is likely to pass SAFRA (student aid and fiscal responsibility act) that has already been passed by the House. FFEL (federal family education loan) that has till now been passing on loans to students will be no more once SAFRA is passed by the Senate. A number of the private loan companies have grouped together... this was more or less expected... and has formed PSC (project student choice) to campaign against SAFRA. This group also has their presence in Facebook, the biggest social network.

This group is planning to get hold of student support by misguiding them with wrong information. Ed America and Chase, the biggest loan companies cannot see why providing loans to students under the FFEL should be discontinued and they have put this on record. As of date the battle still continues, but this does not mean that private student loans are dead.