The private student loans for online are booming, and a group of consumer advocacy has taken a critical look at these non-federal loans, which now represent nearly a quarter of all loans for education.
In a report released today that outlined some of the dangers of private student loans for online, the National Consumer Law Center reviewed 28 private student loans for online from 2001 to 2006. The group found all loans have variable rates, with rates of initial annual percentage ranging from 5 percent to 19 percent. The average initial APR was 11.5 percent.
The survey also found a departure tax by 4.5 per cent (the highest price from a loan in the study was 9.9 per cent). Direct federal loans now have a departure tax of 2.5 percent.
The survey of more than two dozen private student loans for online found several other problems, the report said. A number of donors in the study were not willing to offer a reasonable settlement, and some loans, "stated explicitly that there will be no cancellation if the borrower or co-signer dies or becomes disabled.
The report on private student loans for online presents many similarities between the private student loans for online and sub prime mortgages, including tightening credit lines, risk-based pricing, predatory terms, "push" marketing communication and inadequate information. The report states: "We can not say with certainty that the market for student loans is moving towards the same fate as the industry sub-prime mortgages, but there are ominous signs."
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