As tuition steadily rises and scholarships are in high demand, students are often left wondering what their best options for covering college costs are.

An overwhelming amount of college students and their parents decide to take out loans to meet their financial needs. However, without enough research, it is easy for students to become overwhelmed by all of the options.

Two categories of loans exist-federal and private-that can be utilized towards the financing of the tuition bill. Federal loans, such as the Stafford or Parent Plus Loans, are offered by the government and can be awarded to the student through the completion of their Free Application for Federal Student Aid.

According to Lisa Holland, associate director of financial aid at Eastern, all students should apply for federal loans first. Federal loans have an interest rate that cannot exceed 8.25 percent. This helps protect the student from fluctuating interest rates.

When students borrow from a private institution, they can be put at risk because these lenders often do not have limits on their interest rates. The result is that students pay back a great deal more than what they originally borrowed.

While this is the case in some situations, there are private lenders who offer more beneficial plans for students. The key is making sure that adequate research is being conducted when deciding to borrow funds.

Holland warns students against believing everything they hear and encourages them to read about student loan companies, as some seem much better than they actually are. “My biggest fear is that students will end up suffering,” Holland said. “These commercials may seem convenient but you could end up paying back up to four times what you borrowed.”

Students are consistently bombarded with messages from loan companies and often times make choices in desperation that, in the long run, cause more harm then help.

Many private lenders were under scrutiny this past summer regarding policies concerning how they choose to offer their funds.

An article from the New York Times explains how various private lenders would evaluate the schools they were applying to before allowing the students to have loans. “Andrew M. Cuomo, the New York State attorney general, has helped expose financial ties between some lenders and colleges-including kickbacks to financial aid officers-that put their own interests ahead of those of students,” the article said.

Due to the controversy surrounding loans and the questions concerning various companies, it is even more imperative at this point that students do the necessary groundwork before committing themselves to any one company.

Eastern’s financial aid office has compiled a list of private lenders that they have extensively researched and lists them on the university website. These lenders offer services electronically which is a huge benefit for students, according to Holland. The top three recommended on their list are: Education Finance Partners, College Loan Corporation and Citibank.

“Students are free to borrow with whoever they want,” Holland said. “We do not prevent them at all, we just suggest.”

Loan Update

As of Sept. 7, the Senate has passed a bill allowing a significant increase in funding for college students. Despite Republican concerns about the future impact of the bill, President Bush has agreed to sign it. Once signed, the bill is slated to take effect by Oct. 1.

Information taken from the New York Times.