Many students get student loans each and every school year because these loans are the easiest way for students to have the financial means to go to school. A student loan is very easy to be approved for and countless students are unaware of the risks involved with borrowing so much money, as it is really a major financial endeavor for such young people. A bill was passed in 2005 that omitted student loans from bankruptcy hearings.
What this means is that a student loan cannot be wiped clean if a borrower files for bankruptcy. This was meant to create a risk free loan for the lender but, unfortunately, these lenders kept interest rates very high after this bill was passed. This basically provides no relief for the borrower and puts all of the power in the hands of the lender.
In addition to this, there is evidence that certain universities have been persuading students to apply for loans through certain companies and have been getting kickbacks as a result. It is very easy for those in the financial aid office to do this, as all they have to do is recommend a company and a student will be very likely to visit that company first. In many cases, these students would even sign up for loans with higher interest rates just because the school recommended them.
This is a highly illegal practice and is a major problem within the student loan industry, as these students are usually very young and should not be making these major financial decisions on their own.
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