A continuing trend that is increasing is more students turning to private loans rather than federal loans. The cause of this trend is the higher tuition rates and more direct marketing by the private loan companies. Many private lenders will directly approach students about private loans.

However, as a result many students who don't know all their options are losing out on federal student loans that offer lower rates. The Institute for Higher Education Policy found in a report that nineteen percent of students do not borrow the full amount that they could have received at lower rates through a federal loan program when they get a private student loan.

Between the 2005 and 2006 school year the amount of private student loans was over sixteen billion which is up from over one billion during the 1995 to 1996 school year. The federal student loan program increased from 36.9 billion to 68.6 billion which is an 86 percent increase.

Private student loans do not have the same protections that you could get with a federal student loan. Private loans come with an adjustable rate which is not good for low income students while the federal student loans have a fixed interest rate of 6.8 percent.