Private loans must be last avenue to try

Nearly half of the 2.5 million students who went to college last year had to turn to private lending sources to cover costs, said David Kenny, chief executive officer of the online college navigator CollegeZapps.com.

They are students caught in the "middle class squeeze” — whose families make too much money to get need-based aid, but make too little to easily afford tuition and fees.

But there are places students should turn to for aid before taking private loans, said Kenny and the state’s executive director of the Oklahoma Guaranteed Student Loan Program.

"The first thing is, the family needs to sit down together ... and talk with the student about the budget they need to live with,” loan program director Mary Mowdy said.

Kenny’s first tip is to apply to a lot of colleges — he suggests at least 10. "If you’re accepted to three or four schools, you’re going to get three or four financial aid options, and they’re going to be thousands of dollars in difference,” he said.

He also said not to rule out private schools, because while tuition is likely higher, they might offer better financial aid.

Most of the scholarships students have a good chance of winning are going to come from the colleges, Kenny said. And students also should look at local scholarship funds.

"That’s where I tell kids to focus, because the national stuff, you’re up against a lot of other things,” Kenny said.

Mowdy, who works for the Oklahoma State Regents for Higher Education, offered advice for students still needing additional money. She said students should fill out the federal aid form even if they don’t expect to qualify for need-based aid, so their colleges of choice will know their situations.

Federal loans are the first place students should turn to, she said, because they are the most student-friendly, with the best repayment options and no credit check to live up to.

There are some borrower-friendly loans such as the PLUS Loan, though a credit check is required, she said.

"As a last resort, there are private loans. ... It’s really important that a student and family who think that they are going to pursue a private loan need to shop around.”

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