47. Private Loan Perils

Nearly 50% of undergraduate private student loan borrowers fail to exhaust their low-cost federal student loans to finance their college education.

—Consumers Union report

Alison Rabil, the director of financial aid at Barnard College, became concerned one day when she was examining figures on the number of students at the women’s college who were taking out private loans.

Rabil and others in Barnard’s financial aid office certainly understood why private loans should be a last resort. But the school’s parents, even though many were college educated, didn’t appreciate the potential hazards of a private loan, which is the fastest growing source of student debt in the country.

Consequently, the school in New York City ...

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