Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Why Private Education Loans Need Reform

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Why Private Education Loans Need Reform

Article excerpt

For many students, education debt nearly is a practical puzzle. This lending typically proves crucial and extends enormous utility; stickiness usually surfaces only after a student graduates and his or her loans enter repayment. While debt dollars or repayment problems may differ across academic majors and college settings, students should be reasonably able to defer their education loans, regardless of lender, while enrolled in school. When borrowing for education, students often draw first on federal student aid programs, which provide benefits regularly missing from private lender agreements. Federal student loans generally charge lower interest rates, rarely require a co-signer and delay repayment while borrowers are enrolled in school. Students usually turn to private loans when government aid is exhausted or their program of study is ineligible for federal aid.

While the financial obligations of these loans are routinely debated and stressed, challenges loom when students pursue additional degree programs, delaying their income-generating careers even as loan repayment is enforced.

As an example, the plight of medical students, who face remarkably lengthy training and especially high education costs, lucidly demonstrates why policies on private education lending need improvement.

The average age at medical school matriculation has been consistently increasing; a 2013 survey of first-year students by the Association of American Medical Colleges found that 57 percent had graduated from college more than a year ago. Each student has his or her own reasons for delaying entry, such as pursuing professional experiences, graduate programs or premedical courses.

This trend has important implications for repayment terms. In seeking more schooling, for example, students may increase their need for private education loans. …

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