Students resort to private loans, staggering debt

Carrie Sturrock |

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As the cost of college skyrockets and the federal government limits how much it will loan students, young adults increasingly are taking out private loans to finance their education. The amount loaned to students nearly tripled between 2001 and 2006, from $6.1 billion to $17.3 billion, according to an annual student aid survey released by the College Board. The trend is especially dangerous because such loans almost always carry a variable interest rate and lack the protections offered by federal loans, so if interest rates go up, your private student loan can look like a credit card pretty quickly. Recent changes in federal law make it nearly impossible to discharge any kind of student loan debt through bankruptcy. Instead, a borrower faces the possibility of a ruined credit rating or being forced into an unaffordable payment plan. College students are an extremely vulnerable segment of the population. Students often get into trouble because they don't fully understand the terms and agreements of what they're getting into. What sense does it make to dig the hole deeper and create an underclass who because of their student loan default will never get out of debt?