Managing Student Loans

European users of Helium won’t really understand Americans’ obsession with college and university costs, because those costs are so heavily subsidized in most European countries. But in the US, college and university costs can easily equal half of a family’s pre-tax income. So parents start worrying about academic costs practically from the date their child is born, and if they have multiple kids, the concern rises exponentially.

Into this situation comes the leeches who seem to lurk around every financial concern in the nation. These leeches in this case purport to offer special rates for student loans or higher loan amounts. At their most basic, these scammers obtain your financial information and use it to rob you. They ask for information for “pre-approval” of a loan, and you never hear from them again, though you suddenly realize that your bank account is cleaned out.

On the more sophisticated level, the companies actually do offer loans. But they come with various fees, teaser rates, commissions, etc., so that they cost far more than government-supported loan programs. By the time you realize that you’ve been scammed, it’s too late, because you signed the papers. And thus, a second lien against your house, with an interest rate of 15%, is slamming you every month.

The solution is to start with people you can trust. The top three choices are: 1) Your bank or lending institution: 2) Your child’s high school guidance counselor; and 3) The financial aid office of the college your kid will attend.

Professionals at each of these institutions can point you towards the legitimate programs. They can also look at something you’ve been offered and quickly tell you if it seems to be pretty fair and common. At least you will know that you are being offered a fair deal – and then it’s up to you to accept or reject it.