Private student loans 101: How the terms differ

For college-bound students, the easy money seems to be everywhere. The website for Discover’s student loans says it can help: “Cover up to 100 percent of your college tuition, housing, books and more.” An online ad by Wells Fargo states that “It’s Quick, Easy and Free to Apply,” the Associated Press reports. Over on the site of student lender Sallie Mae, the words “Low rates!” jump off the page. It’s tempting marketing for cash-strapped students and families who may be scrambling to figure out a way to cover any remaining college costs as the fall semester approaches. But the student loans offered by banks and credit unions have key differences from Stafford loans, which are issued by the U.S. Department of Education. Private student loans are widely considered an option of last resort only after federal loans, scholarships and grants have been exhausted because they tend to be more expensive and come with fewer safeguards…

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