July 20, 2020
A new high school graduate may take out about $37,200 in student loans for college, according to a recent NerdWallet study.
And for many of them, that won’t be enough.
Thirty-eight percent of students borrow additional money for college via credit cards, home equity loans and other non-student loans, according to a May 2020 report from the Federal Reserve.
The Student Borrower Protection Center, a Washington, D.C.-based nonprofit, has dubbed this the “shadow education finance market” because these options can lack transparency.
“A lot of these entities are operating with very little accountability or oversight,” says Seth Frotman, executive director of the SBPC.
If you need loans to cover unexpected costs or attend a school that doesn’t qualify for traditional loans, here’s how to make sure you understand what you’re borrowing — and whether the investment will be worth it.