Most college students take out school loans without understanding the differences between federal and private loans or the risks of variable interest rates, and the ease of online loan application forms has exacerbated misunderstandings that tack on years of repayments.
About two-thirds of college students don’t understand the basic differences between federally-backed student loans – which usually have lower and more stable interest rates – and private school loans that often have wildly fluctuating interest rates once students begin repayment, according to findings in a survey conducted by NERA Economic Consulting and Young Invincibles, a student advocacy group based in Washington, D.C.
Common misconceptions about student loan options aren’t a result of lazy Google searches, wayward clicks, and deceptive sales pitches from banks and companies hawking private loans.…Read More