Maryland Higher Education Commission

January 2008 Press Release

 

 

 

MHEC offers informative guide on student loans

 

 

ANNAPOLIS--(January 4, 2008)

Unsavory student loan programs which put students seeking degrees of higher education at risk was one of the most controversial and disappointing stories of 2007.

To ensure students don’t fall into the trap of taking out ill-advised or unnecessary student loans, the Maryland Higher Education Commission offers a valuable pamphlet to guide Maryland students seeking private loans for their education.

Recent MHEC research shows that 45% of Maryland students rely on private student loans to help meet their tuition payments.

The pamphlet, “MHEC’s Guide to Understanding Private [Alternative] Student Loans” is currently available for students and parents seeking help to fund their post-secondary education.

“The student loan industry is for the most part reliable and reasonable,” Higher Education Secretary James E. Lyons, Sr., said.

“However, as we learned this year and in past years, some lenders take advantage of those seeking to fund their higher education. This is most unfortunate.”

“MHEC’s Guide to Understanding Private [Alternative] Students Loans” provides information about what exactly are private loans, what the relationship is between a school and a private lender, and how much a private student loan really costs in the end.

In fact, it provides a useful table on what a private student loan costs when origination fees and interest accumulation are added to the original loan amount.

MHEC’s brochure takes would-be applicants for private student loans through the often complicated process.

For instance, it lays out things to consider when determining if a private student loan is right for loanees. Among the recommendations are:

• If possible, shop around for loan terms.

• Completely read and understand the contract before you sign it.

• Ask questions before you sign it. DON’T BE SHY.

• Understand what may happen should you default on a loan.

If you default on a private student loan it may harm your credit rating; may harm your co-signer’s (if you have one) credit rating; may harm your ability to obtain future credit (for cars, appliances, other student loans, homes, etc.); there’s a possibility you may get sued for the entire amount of loan, payable immediately; or you may be held liable for the costs associated with collecting your loan, including court costs and attorney fees.

The guide also provides information about how private student loans differ from federal student loans and brief information on Federal Financial Aid (Title IV) loans including:

• Perkins Loans

• Stafford Loans (Direct and FFEL) and;

• PLUS Loans

To find the brochure on private student loans, go to www.mhec.state.md.us and access the Career and Workforce Education link, then Private Career Schools.