Anyway, the Project on Student Loan Debt released a press release the other day regarding some alarming trends on private student loans. I’ve included it below for your information.

As Student Debt Rises, More Undergraduates Go Straight to Most Dangerous Loans

New Analyses Find Disturbing Trends and Inadequate Disclosure Rules

Berkeley, CA – In 2007-08, nearly two-thirds (64 percent) of undergraduate students who borrowed private student loans did not take out all they could in safer, more affordable federal loans, according to an analysis released today by the Project on Student Debt. In addition, the proportion of all undergraduates who took out private loans increased dramatically – from five percent in 2003-04 to 14 percent in 2007-08.

“Private student loans are one of the riskiest ways to pay for college,” said Lauren Asher, president of the Institute for College Access & Success, home of the Project on Student Debt. “Both the federal government and colleges should do more to prevent students from taking out unnecessary private loans.”

Like credit cards, private loans usually have variable interest rates that are higher for those least able afford them – as high as 18 percent in 2008. But unlike credit card debt, private loans are nearly impossible to discharge in bankruptcy. They also lack important consumer protections that come with federal student loans. Private loan borrowing has slowed since the credit crunch, but these risky loans remain available from major lenders.

Among the Project’s findings:

• While experts agree that private loans should be used only as a last resort, the share of private loan borrowers who could have borrowed more in federal Stafford loans increased dramatically, from 48 percent in 2003-04 to 64 percent in 2007-08.

• Private loan borrowing is not limited to students at high-priced schools. In fact, the majority of private loan borrowers (63 percent) attend colleges with tuition and fees of less than $10,000.

• Among all racial and ethnic groups, African Americans are now the most likely to borrow private student loans. The percentage of African-American undergraduates who took out private loans quadrupled between 2003-04 and 2007-08, from four percent to 17 percent.

New Disclosures Inadequate
“Without stronger consumer protections, students will continue to be vulnerable to aggressive private loan marketing tactics and inadequate information about their borrowing options,” said Asher. The Federal Reserve Board recently finalized regulations for new consumer disclosures for private student loans, as required by Congress last year. However, the Project’s analysis of the new rules reveals the Board did not go far enough to warn consumers about private loans and make them aware of other options.

“We are very disappointed by the Federal Reserve Board’s decisions. The disclosures will not have the effect that many in Congress had hoped,” said Asher. “These weak regulations underscore the need for mandatory school certification of private loans so schools can intervene when a student has better financing options, and for a consumer financial protection agency that would more effectively protect students and families from dangerous private student loans.”.”

If you’re in need of a student loan, I strongly urge you to go with government programs over private ones.

Clearly, if you’ve read this blog over the years, you know that I have a long and storied history with student loans. Over the course of my 7 years as an undergraduate and graduate student I filled out a bunch of these things; my Mother and I filled out my first few FAFSA forms and I filled out the last few. What I remember about filling out the forms was not that it was tedious (filling out any government form is tedious), but rather that the results reports were not good enough.

In other words, you’d put together this FAFSA and then get a report back (mine was from my undergraduate institute) telling you which aid you qualified for based on your responses. The report didn’t speak to potential repayment scenarios or to existing debts under each program; both pieces of information could really help students and their families make better decisions. I’m not sure why this information isn’t included in the report as both the federal government and the college have the information at their fingertips.

The FAFSA should be changed, but this change should be a part of changing the entire student loan process.

What I found to be most intriguing about the book was the way it used real accounts to describe both Washington’s army and the British army. Also, the sheer size and skill of the British army (plus their ability to hire Hessian soldiers to do their dirty work) should have made them the winners of this “war” by a long shot. Yet, the Continental Army – in the face of poor supplies, captured heroes, and hundreds of deserters – managed to win the war.

The book doesn’t go into how we won the war, since it continued on for a few years, but the tactic (if you can call it that) of running away is heavily covered. Also, I was glad to see that a true representation of George Washington was included. For those of you that don’t know, this guy was about as pompous and arrogant as they come (one of the reasons why I’m a fan).

I suggest this book for any history buff or anyone who wants a real account of the not-so-glamorous Revolutionary War. Also, if you’re interested in the military and its interaction with the federal government, one could successfully argue that this book chronicles the very beginning of that relationship as Washington was in constant contact with the Second Continental Congress. You may also enjoy reading how Washington pretty much self-regulated his actions (and the actions of his officers) and how he thought it of utmost importance to be sure that the Congress gave their approval to his actions.

Since the summer is upon us, this might be a good beach or backyard read. Feel free to leave comments if you decide to read the book!