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Private Loans Contribute to About $150 Billion in Student Debt Crisis

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Private student loans are not always as easy to come by as their federal counterparts, leaving many borrowers left scrambling when they don’t have quite enough funds from grants, scholarships, and what can be limited government funding. For those who have good credit, however, or co-signers, they may look forward to variable rates that allow for a much better financial deal overall. There may also be greater amounts of funding allowed for borrowers, in comparison to more conservative limits on federal loans.

Problems arise for all too many student loan borrowers upon exiting a college or university, only to find that they are struggling in an overly competitive workforce or if they were not able to graduate, they are left with lower-paying jobs and still burdened with a student loan that may never do them any good at all. Cumulatively, student loan debt in the US totals over $1.52 trillion today, with private loans making up $150 billion of those figures. And while the result in taking out private loans is the same as taking out federal (you go to school, and hopefully graduate!), there are big differences regarding interest and repayment options later.

Defaulting can have severe repercussions whether you have taken out federal or private loans, but true challenges may arise if you find that you are out of school, beholden to paying off what can be significant monthly sums, and in need of flexibility. While public loan servicers may offer a variety of different plans to prevent you from default, you may find yourself out in the cold regarding alternative repayment when it is much needed. Borrowers often find later that they took on more than was manageable in terms of student loans and will be unable to make payments as originally hoped, but other issues may have arisen too such as an illness or time needed to recover from an accident.

Without other flexible choices for repayment, such as deferment, forbearance, or income-based plans, to fall back on, private student loan borrowers may fall into delinquency and then default simply because they are helpless to move forward. A default not only wreaks havoc on the credit report but can also lead to extremely aggressive collections activity and then the potential for a collections lawsuit, default judgment, and even more severe consequences.

Speak with an attorney from Fitzgerald & Campbell, APLC as soon as possible to examine your options. Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include student loan issues, bankruptcy, and other debt management processes. We are here to help! Click here to schedule a free 30-minute consultation, call us at (844) 431-3851, or email us at

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