Why do people borrow private student loans instead of federal education loans?
Federal student loans are inexpensive so, everyone want to to apply for the same. But it has limited funds hence, only qualified students can get loan amount for their studies. Secend thing is that federal loans are limited to particular amount. It is available only to pay tution fee whereas students need money also for other expenses like transpotation, books, study tour and fooding. Whereas Private student loans are available for every student and there is no limited amount. Students may also get amount for expenses other than tution fee. That’s why people apply for private student loans.
Given that the Stafford and PLUS loans are less expensive than most private student loans, why do some families seem to prefer the private student loans? For example, 91.1% of undergraduate private student loan borrowers do not borrow from the PLUS loan program (89.1% at 4-year institutions), 22.7% do not borrow from the Stafford loan program (19.5% at 4-year institutions) and 21.7% did not borrow from either program (18.4% at 4-year institutions), based on FinAid’s analysis of the 2003-04 National Postsecondary Student Aid Study. Among the undergraduate students whose parents did not borrow from the PLUS loan program, 12.9% did not apply for federal student aid (11.6% at 4-year institutions). Among the undergradaute students who did not borrow from the Stafford loan program, 51.8% did not apply for federal student aid (53.4% at 4-year institutions). Among undergraduate students who did not borrow from either the Stafford or PLUS loan programs, 54.2% did not apply for federal student a
