For collegiettes™ who do not have the good fortune of a full-ride scholarship or a wealthy background, the need to borrow money to pay for higher education is a harsh but common reality. Private loans are the less popular choice, resorted to once finanical aid has run out and Stafford loans have been taken advantage of. Wells Fargo recently announced fixed-rate student loans that the bank hopes will change that statistic.
Private loans have historically been considered a ‘bad’ choice by financial advisors because deferment is not always guaranteed by the lender, and higher interest rates can burn the borrower in the long term. The new Wells Fargo loans have fixed rates from 7.75% to 14.25%, which will vary depending on the financial stability of the borrower or co-signer.
But whether a fixed rate is offered or not, borrower beware of the deadlines for payment and the fine print. It was early Tuesday morning in Stockton, California when Kenneth Wright awoke to find a SWAT team in his home, breaking down his door and startling him as well as his three children, ages 3, 9 and 11. Wright was barely awake when police officers locked handcuffs around his wrists and put him in a patrol car to wait out a sentence for a crime he did not commit.
Officers were under instruction by the U.S. Department of Education to find Wright’s estranged wife, who was in default on student loan payments and no longer lives at the Stockton address. Wright was eventually released, but his door and his pride were left damaged. He is still awaiting an apology from the city, and had this advice to give borrowers — “people that have student loans out there or people that owe money, please pay your bills, take care of your credit, if you don’t believe me, this could be you one morning.”
As The Huffington Post reveals that only 8% of student loans during the 2009-2010 academic year were from private lenders, Wells Fargo is offering both variable and fixed rates for students as well as a 1 percent discount on interest rates. Regardless of whether a lender is federal or private or what benefits they are offering, Wells Fargo holds stake in an economy where less and less money is readily available and college enrollment is on the rise.
Read more about Kenneth Wright here and sound off in the comments section!