Colleges Urged to Do More to Help Students Avoid Private Loans

July 13, 2011

Colleges could and should do much more to inform their students about the availability of federal loans and the risks of higher-cost private loans, the Project on Student Debt asserts in a new report, which describes promising practices that some institutions use and some troubling practices embraced by others. The report, "Critical Choices: How Colleges Can Help Students and Families Make Better Decisions about Private Loans," describes the extent to which significant numbers of students take out higher-priced alternative loans even though they have not exhausted the limits on the federal student loans they can take.

The report praises practices in which institutions (such as Barnard, Mount Holyoke and Grinnell Colleges and San Diego State University) are rigorous about counseling students who wish to take out private loans and critiques other institutions (which it does not name) that certify students' use of private loans willy nilly or treat private loans in their institutional financial aid awards to students as if the loans without making the nature of the loans clear.

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