The fastest growing sector in the multibillion dollar student loan industry is private loans. During the year 2005-06 students borrowed around $ 17.3 billion in private. This is an increase of 913% over the previous decade. At this time the cost of college is really soaring high and the financial aid available is shrinking. At this point private loans make it possible for students to attend college which they could not have done otherwise. Experts feel that such loans could be disastrous if the risks attached with it are not understood. Private loans are not guaranteed by the federal government. Unlike guaranteed federal loans there is no limit on the loan offered by private lenders. In case of guaranteed student loans the rate of interest is fixed at 6.8 %. In case of private loans the rate of interest can be as high as 19%.
Tags: Business, federal loans, private loans, student loans
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