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MARK AUSTIN THOMAS: This week, high school seniors across the country are facing a due date. Not on their homework, but on where they want to spend the next four years. May 1st is the deadline to accept most college offers. With that Yes comes a big financial bill. As Marketplace's Nancy Farghalli reports, the competition to help families pay is heating up.
NANCY FARGHALLI: The blue screen is big brother.
KATHY THOMAS: Just looking at this one screen where we put the student's financial aid. I have access to everything.
Kathy Thomas is with the University of Southern California, and she has all the essentials at her fingertips . . . GPA, SAT score, and the families' assets.
THOMAS: Oh, gee, the student has very little money. They have $118 in the bank.
As associate dean of admissions and financial aid, Thomas helps calculate how much a family can afford to pay.
THOMAS: It's getting them to think about how much they are actually going to pay for financial aid.
The Federal Government still provides the bulk of student loans. But there are limits as to how much they'll loan you. So, families go to private lenders. And that's become the fastest growing segment of the higher education loan market.
Sandy Baum is an economics professor at Skidmore College.
SANDY BAUM: The interest rates are not regulated and the terms on them vary considerably. So they tend to be more expensive for students than borrowing under the federal loan programs.
In fact, some of the biggest private lenders — like Sallie Mae and Bank of America — can charge different interest rates to different students with the same academic profile. And they tend to look at the family's financial history, not their child's financial future.
BAUM: There are some organizations — My Rich Uncle is an example of an unusual lender because they are really trying to estimate for themselves what the future earnings are of different students based on their characteristics.
RAZA KHAN: For students who do qualify for loans — we offer them an interest rate incentive where their academic history can actually help them get a better rate.
Raza Khan is the 28-year-old co-founder of My Rich Uncle. The company started giving out loans last August, and they say they give credit for a student's academic worthiness. Not just for their financial worthiness. Imagine a quarter point off your interest rate for good grades.
Florida State junior Natalie Tuttle hopes she can get a discount. She has a loan of $9,000 from my Rich Uncle to go to Spain for a semester.
NATALIE TUTTLE: You know, I plan on paying it back when I get out of school. I plan on working full time. That's why I'm in school to get my degree and hopefully get out in the real world and get a good job.
She's already getting a taste of work. In addition to an academic scholarship and a federal loan, Natalie works part-time as a dental assistant to pay for college.
I'm Nancy Farghalli for Marketplace.