Slowing Economy Shuts Out Many Needing Student Loans
The slowing US economy and decreasing money available for borrowing are affecting another area for Parents and students. Student loans for US students wanting to attend college have traditionally been accessible, but it seems as though this reliable source of education assistance may be disappearing. Financial institutions, which used to lend funds under the Federal government backed student loans, are finding this is no longer profitable in the current crisis in the financial districts.
I heard one news alert that a state agency has suspended a loan program that serves borrowers. This will affect 100 universities and colleges and there are fears that other agencies and colleges may follow the same path. Some say the reason was the credit crisis.
Traditionally, money for college have been backed by some of the major US banks, including JP Morgan, Sachs Goldman and Citibank. These banks will no longer be supporting the auction system that allocated resources for financial assistance. There are also predictions that education assistance will become more cost prohibitive.
One of the main sources of credit to students has always been the federal government backed funds for college, which provides funds to means-tested students. Many students find that this loan only covers tuition and they then need to take out a further private loan to cover other expenses. These are the very loans that are tipped to disappear, although it seems as though lenders are standing by their obligations under the federal backed program.
The effect of the credit squeeze will affect those families with poor credit ratings and lower incomes. The people who have been caught up in the mortgage crisis may have children studying at college, who will no longer be able to access student loans because of their parents’ credit score.
The current estimation is that 100,000 students will not qualify for the Federal government or private student loans because of credit rating issues. This, coupled with the reduction in the number of loans actually available, will make attending college difficult for many US students.
Students caught up in this financial crisis and who are unable to obtain student aid still have a few solutions left. You should go and talk to the student aid department at the school you’re wanting to attend to see if there are any scholarships or grants available to you. They may also be able to get you enrolled in a State aid program or find you a source of aid not available to just anyone.
Just remember, never lose hope. If you can’t get a hundred percent of your college needs financed, you may have to cut back on classes and get a full or part time job and work your way through college. Sure, some will go without college rather than work, but you can’t deny that it’s effective.
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