The slowing US economy and decreasing money available for borrowing are affecting another area for financially strapped families. Student loans for US students wanting to attend college have traditionally been accessible, but it seems as though this reliable source of funds for college may be drying up. Banks, which used to give money under the Federal government backed student loans, are finding this is not profitable enough for their bottom line in the current state of the credit institutions.
I heard one news alert that a state agency has suspended a student loan program that serves Parents and students. This will affect 100 universities and colleges and there are fears that other agencies and colleges may follow the same path. I read that the reason was the global credit crisis.
Student loans are usually supported by some of the major banks, including Goldman Sachs, JP Morgan and Citibank, but they have stopped supporting the normally low-risk securities that funds for college traditionally backed. Financial experts are predicting that funds will also become more expensive, as well as being harder to access.
The biggest scheme that provides college loans is the Federal government-backed student loan scheme, providing loans to means-tested students. Students mainly use these loans to pay for tuition and then seek a private loan to cover their additional expenses. It is these private loans that are set to become more difficult to find, although it looks as though companies are still supplying funds for the government scheme.
The main effect of this problem will be felt by low income families and those with a poor credit rating. There are parents who have been negatively affected by the mortgage crisis who have college aged children. These young people could find themselves disallowed by loan providers because of the parents’ low credit score.
An estimated 100,000 college students will no longer qualify for federal government or private company loans this year because of the problem of poor credit ratings. This situation adds to the reduction in the number of companies providing student loans to make a grim future for some aspiring college 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.
If all else fails and you find yourself unable to procure student aid for your College studies, you may have to resort to an old school way of getting an education. By working your way through College! Sure, that’s an unpopular way of getting an education these days, but some students still get an education this way. You’ll just have to cut back on the parties and beach trips. It all comes down to how bad you want to get an education to secure your future.
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