Staff File Photo by Tim Barber A class in the fundamentals of speech meets at Dalton State College.

College senior Joseph Barragan is about to hit a financial brick wall.

Having lost his Georgia HOPE scholarship a few years ago, Mr. Barragan, a student at Dalton State College, has seen his hours cut at the two jobs he works to pay for school. Now a shortfall of more than $3,000 stands between him and his diploma.

"Things have been really tight," the 21-year old Dalton resident said.

So, like so many Georgia and Tennessee students caught between educational aspirations and college costs, Mr. Barragan plans to apply for a private student loan. He worries about the interest rates, which can be as high as 15 percent, but he sees no other choice.

"I really have to look into it," he said.

New federal data shows the percentage of undergraduate students borrowing private student loans jumped from 5 percent in 2004 to 14 percent in 2008, a trend experts call "troubling."

"Private Student Loans are more like credit cards than financial aid, and have very little in common with federal student loans," said Lauren Asher, acting president for the Institute for College Access and Success based in Berkeley, Cal. "Too many students are missing out on federal loans and going straight to one of the riskiest borrowing options."

Most financial aid experts agree private loans are risky and should only be used as a last resort. Still, one in four private student loan borrowers didn't take the cheaper, federal student loans. Fourteen percent of students who accepted private loans didn't even apply for federal aid, according to the U.S. Department of Education.

In Georgia, the increase in private student loans could be attributed to the fact that the state's technical schools don't offer federal loans to students, said Dianne Cox, director of financial aid at Dalton State College in Dalton, Ga.

At Dalton State, the number of students with private loans increased from 3 to 28 in the last four years.

"We discourage it highly," Ms. Cox said, "but some students don't want to fill out the application for federal aid."

The phenomenon is most visible at for-profit schools such as Virginia College or Miller-Motte in Chattanooga, where the percentage of students with private loans skyrocketed from 13 percent in 2004 to 42 percent in 2008, federal data shows.

Rene Gore, director of education at Miller-Motte Technical College, said for-profit schools often are more expensive then their counterparts. Also, while students can receive federal aid for for-profit education, students in Tennessee can't use the HOPE scholarships to enroll.

"The cost of college is going up, and the income ability of students in going down," she said.

UTC Chancellor Roger Brown said he believes federal loans are better than private student loans because of lower interest rates. The amount of debt owed by students to private companies is concerning, he said.

"The average (private) loan costs more in interest payments than the loan is worth," he said.

Chattanooga State Community College doesn't process private loans for students, and officials said they have no way of knowing how many students are accepting money from banks or lending institutions for their education.

Students who apply for private loans have often received their limit in federal loans and need additional money for living expenses, especially if they attend a more expensive private, for-profit or public four-year school, said Jeanne Hinchee, director of financial aid at Chattanooga State .

Also, some students who take out private loans are ineligible or have lost their eligibility for federal assistance, she said.

To keep their federal aid, students have to complete a certain number of classes and maintain a 'B' average, Ms. Cox said.

"If they have been in school forever, they lose their eligibility for aid," she said.