Today, paying for a college education is an important issue that is faced by parents right from the moment of their child's birth. And when the parents can only partially help or not help at all; as may be in many cases; many students entering college do face a complex decisions about paying their education, right from applying for scholarships and grants to low-interest student loans from the federal government. In recent generations, demand for post secondary education of all forms continues to increase in large part because of money being made available by the government to offset some or all of the financial burden of college.

Private student loans typically have variable interest rates while federal student loans have fixed rates. Consumers should be aware that some private loans require substantial up-front origination fees. These fees raise the real cost to the borrower and reduce the amount of money available for educational purposes. Most private loan programs are tied to one or more financial indexes plus an overhead charge. Because private loans are based on the credit history of the applicant, the overhead charge will vary. Students and families with excellent credit will generally receive lower rates and smaller loan origination fees than those with less perfect credit. Money paid towards interest is now tax deductible. However, lenders rarely give complete details of the terms of private student loan until after the student submits an application, in part because this helps prevent comparisons based on cost. Borrowers with bad credit can expect interest rates that are as much as 6 % higher, loan fees that are as much as 9 % higher, and loan limits that are two-thirds lower than the advertised figures.

Private loans often carry an origination fee that is one-time charge based on the amount of the loan. They can be taken out of the total loan amount or added on top of the total loan amount, often at the borrower's preference. Some lenders offer low- interest, 0-fee loans. Each percentage point on the front-end fee gets paid once, while each percentage point on the interest rate is calculated and paid throughout the life of the loan. Eligible loan programs generally issue loans based on the credit history of the applicant and any applicable consigner/co-endorser/coborrower. This is in contrast to federal loan programs that deal primarily with need-based criteria. For many students, this is a great advantage to private loan programs, as their families may have too much income or too many assets to qualify for federal aid but insufficient assets and income to pay for school without assistance.