If you are planning on taking a student loan to help you get through college, you should know that there are certain risks that come with it. In this article, we will discuss the risks of student loans that you should consider. This is especially if you are comparing private versus federal student loans. Here’s a list of risks you need to consider below:
Private Loans Vs. Federal Student Loans:
- Interest rates are higher in private loans than federal student loans.
- Private student loans do not have limits on the amount you can borrow. On the other hand, federal student loan limits the loan to only $23,000 in undergraduate student loan debt.
- Federal student loans include programs such as student loan forgiveness, student loan deferment and free student loan consolidation. These benefits are not given by private banks who offer student loans. If it wasn’t for these protections, there would be millions of borrowers put into a higher risk of bankruptcy.
- Private student loans cannot be discharged in bankruptcy. This means that it is possible for individuals who take private student loans to be stuck in debt for life.
- There are a huge number of college students who take out student loans and ends up not finishing the degree they took out a loan for. In the end, they leave school without a degree and a large debt.
- Student loans takes a huge chunk out of your paycheck as soon as you start your job.
The next time you think of getting a student loan, think carefully. Consider these risks and weigh if these risks are worth the benefits you will get. You also need to make sure that you get a secure and big enough return on the quality of education you will be getting and the degree. At the end of the day, taking out a student loan means you’re buying the education. Be sure you’re at the better end of that deal.