Private Student Loan Agreements Murky

[Sebastian (a lady)]

NYTimes is running an article on the difficulty in deciphering private student loan offers (http://www.nytimes.com/2009/05/03/business/03gret.html?hpw) (ie, non government loans). I thought that it was interesting.

I thought the comments about certain fees not being disclosed up front was interesting.

[Sharon in MD]

I was somewhat forewarned about this by our son's financial office at his college. The woman we met with there advised us to be very careful with the private loan industry and make sure you read and understand and demand full disclosure before signing anything. I think this is a really helpful article and link!

[Sebastian (a lady)]

I got a large loan just before senior year in college. They were called career starter loans but they were mostly used to buy a car. Somewhere in all the briefings and discussions, I failed to internalize the idea that I was in fact piling up interest charges over the 16 months that payment was deferred. I was rather shocked to find out that my first several payments did almost nothing to pay down the loan other than interest.

Fortunately, a classmate tipped me off to the idea of paying it off early. I was making enough money to do this pretty quickly once I graduated. But the bank wasn't really set up to facilitate it well. And I would not have been surprised to have found that I'd agreed to some huge fee if I paid early.

[transientChris]

This is a tip for you Sebastian (maybe?) and any other Military Officers (retired, reserve or active). Join the MOAA. They have a fabulous no interest charged loan program. It is not a giant program because they believe in keeping loans at a reasonable amount so people can pay them back.

[Sharon in MD]

Yeah, I forgot about those myself. The frustrating thing for me is that the applications open in November and close around 1 March. I didn't find out about them till mid-march....too late for us for this year. Rats.

[Sebastian (a lady)]

Ah, thanks for the tip. Thankfully, college for my own kids is a ways off. Two of them have an interest in the military, but I'm cautious about that, because I don't want them to just consider it the family business, but rather something that they really have a passion about. (There is enough potential misery in military service without having a love for what you do.) But I do tend to forget about loans like that for our own service. We also have a lot of hopes about the new GI bill and its transferability.

It is a good reminder to look to associations like credit unions and union groups and ethnic/cultural organizations for scholarships and loans (even if they are small) that might be on better terms.