2. Private Loans Are Becoming More Popular
Private loans are the fastest-growing source of student financial aid, with $14 billion in loans in
2004 coming from private sources - an increase of 600% over ten years before. Much of the reason
for this is that rising college costs have not been matched by increases in federal aid. The maximum
total amount of aid available through the popular federal Stafford loan program, for example, has
stayed at $23,000. Private loans also have steeper interest rates than their federal counterparts,
which means that students' overall debt burdens are higher after graduation. In addition, many
charge that there is greater danger of corruption with private loans.
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