Private Students Loans Can Be Costly Burden; Federal Government Making More Aid Available

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Private Students Loans Can Be Costly Burden
Federal Government Making More Aid Available

Reporting
Sue Kwon San Francisco (CBS 5) ―

Eli Saddler of San Francisco has a law degree from Duke University. He also has plenty of debt.

The 30-something owes about $120,000 on his student loans, and said it's been "a real stuggle to pay that back." In fact, Eli -- who took out a mix of public and private loans to pay for his education -- said his loans have cost him as much as $1,400 a month.

And it's those private loans that are the biggest problem. Interest rates can soar up to 21%, while rates on government loans top out at 8.5%.

Edie Irons, of the Project on Student Debt, warned private loans "are much more risky and more expensive than federal loans. They have higher variable interest rates and they lack the borrower protections."

Irons also said almost half the students who take out private loans, don't exhaust their federal options first.

And more federal aid is now available. While banks have been curbing their lending, the federal government has been making more student aid available. According to the Department of Education, government lending for the 2008-2009 school year is up more than 18 percent. The government's also offer bigger loans: up to $31,000 total for a dependent undergrad.