Chicago Tribune on April 16, 2012

by Steve Rosen

Which student loan repayment option is a better deal: a loan with a 4 percent fee and 9 percent interest rate, or one with a 5 percent fee and 8 percent rate?

This question was part of a quiz on loan terminology found at CollegeGold.com, which is affiliated with the FastWeb.com financial aid and scholarship website.

How parents and prospective college students answer that question says a lot about how much they understand the often confusing and complex financial aid process.

For the record, a loan with a 5 percent fee and an 8 percent rate is the correct answer. That’s because an extra 1 percent in the interest rate costs more than a 1 point increase in the fees.

Two weeks ago, I wrote about a survey from the nonprofit Young Invincibles, which found that many college students are signing on the dotted line for student loans they don’t fully understand. Some students don’t even have a ballpark idea of how much they’ll need to pay back after graduation.

This problem has been building for years. But what makes it particularly frightening now is that there’s about $1 trillion in student loan debt outstanding, and failure to repay this money could have lasting negative consequences for millions of young adults.

That’s why the new federal