Another great story from Business Week, this one on the growth and danger of private loans. What's up with these guys? Do they take seriously the concept of young people as human capital or something?
For cash-strapped undergrads like Jesse, though, often the biggest problem is securing a loan in the first place. Many haven't yet established good credit, and the majority of private loans require a credit check. And even if "credit-risk" students manage to procure a private loan at a high interest rate, a low-paying first job could mean that monthly student loan repayments gobble up 50% of their salary.
Nevertheless, private loans have proven a valid option for students facing the increasing financial demands of higher education. But it's important that students go into the process with both eyes open -- as well as their wallets.