Durbin warns of private student loans' rates, fees

August 20, 2012 3:42:54 PM PDT
Illinois U.S. Senator Dick Durbin is warning students and their families about signing up for private student loans.

He says most undergraduate students are eligible for federal loans which are safer and cheaper. Durbin says private loans carry high variable rates and fees.

"It's a world where the interest rates can be two or three times as high as the interest rate on a government student loan, where the students if they are unable to pay and face default, can find the indebtedness growing even though they've been out of college for years," said Durbin.

Durbin has introduced the 'Know Before You Owe Act.' It would require private lenders to get a certification from a school before issuing a loan. Students would also have to be told about a full range of their loan options.