Private student loans are loans that come from a private lender, usually a bank, a credit union, a state loan agency or a non-bank financial institution. When a private student loan comes through your lender, you are signing a contract with them that outlines your repayment obligations, such as what fees and interest payments need to be made over the life of the loan, etc.
They are not linked to a federal education loan repayment plan, nor are they backed by the US government.
A number of factors can affect your private student loan repayment choices, from your age to whether or not you work for the US government. If you are between 18 and 24, you will most likely be eligible for a federal student loan repayment plan, which typically offers lower monthly payments and is easy for people to pay back.
If you are 25 or older, the odds are much higher that you will be eligible for a private student loan repayment plan. The private loan repayment options typically offer lower monthly payments and are more difficult to pay off.
Currently, the average student loan debt in America is over $25,000. Some recent surveys have indicated that there is a $150,000 median average student loan debt for students graduating this year. By those estimates, the average student loan debt is going to be over $50,000 if borrowers simply use the federal program. In some ways, this is unfair. It doesn’t take into account debt that borrowers may have on their credit cards, mortgages and some other debt. Either way, student loans are a significant portion of the financial obligations for those who go to college, so they have to make a lot of tough financial decisions, both for themselves and their future children.
A 2012 study revealed that students who are in default on their student loans have a much higher chance of suffering an early grave than students who never default on their loans. Many students rely on their student loans for repayment and the ability to get a job is a critical component of many peoples’ financial lives. The federal student loan programs in the US are often blamed for poor outcomes. No doubt they do contribute to the problem, but students in general have taken on a lot of student loan debt in the past few decades and now they are really carrying that burden. A loan that once had the potential to provide some security is now one that is extremely difficult to pay back. Just like you would with a car, you’d like to learn how to maintain it and even more so with a student loan. It’s not uncommon to hear friends and family members asking how they can afford to pay for college. Yet it’s simply not realistic, even for the wealthiest families.
Student loans are a growing problem for many in the current economy. For the most part, students who have student loans tend to drop out before graduation or leave school without graduating due to a lack of options. There is a lot of misinformation about student loans, especially from students, parents and the federal government. Of course, there are some great resources out there to help young people with their financial future, resources like the one at
https://www.sofi.com/student-loans-payoff-calculator/ .
