Online counseling pushing college students toward risky private loans


Kantrowitz pointed to recent statistics showing that college students aren’t maximizing federal student loans.

One-quarter of students eligible for federal student aid didn’t borrow from the federal Stafford loan program, and almost four in 10 students borrowed less than the Stafford loan limit, according to Kantrowitz’s research. Those who don’t maximize their federal student aid account for 1.8 million students nationwide.

The percentage of students who didn’t use their maximum federal aid jumped from 2003 to 2008. Kantrowitz said 48 percent of student borrowers didn’t maximize federal student loans before turning to private loans during the 2003-04 academic year. In the 2007-08 school year, that number increased to 62 percent.

The TICAS report cited two unnamed medium-sized public campuses that don’t certify private college loans at all. Both schools receive very few private loan requests, but any inquiry about private loan options is met with a phone call from a counselor explaining other loan options.

This approach, the TICAS report said, was not among higher education’s best practices.

“[A] policy of never certifying private loans may not be flexible enough to address all situations, and could result in students turning to more costly uncertified private loans or other types of borrowing,” the report said.