Credit Crisis May Make College Loans More Costly - Some Firms Stop Lending to Students

[onehandle]

Source: Washington Post

Many college students across the nation will begin to see higher costs for loans this spring, while others will be turned away by banks altogether as the credit crisis roiling the U.S. economy spreads into yet another sector, student lenders and Wall Street firms say.

Students seeking federally guaranteed loans, which are popular because they offer fixed, below-market rates, could be required to pay higher fees to borrow money, according to university finance directors and lenders.

An even greater burden may fall on those taking out private loans, which have become increasingly common as students look for new sources to finance the soaring costs of college. These loans often have variable rates, and they are projected to jump this year.

And at community and for-profit colleges, some students may be denied private loans entirely because the financial industry considers them riskier investments than their peers at other educational institutions.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/03/02/AR2008030202213.html

[pattmarty]

1. I have the solution!!!!!!!! School loans should have NO CAP on interest rates.

[fascisthunter]

15. say what??????

[MissB]

16. I really hope it was sarcasm.

[fascisthunter]

17. Not sure

pretty sick if it wasn't.

[pattmarty]

19. It was.....................

[Javaman]

2. Next on the list of morons* "to-do's", completely privatize public schools!

you want to go to that state school? well I'm sure the University of Hooters has an opening!!

[OhioChick]

3. K&R

Why isn't this on the front page?
:kick:

[Lost-in-FL]

4. Damn, I was just thinking about going for a Masters.

:(

[Meshuga]

5. My wife has just started her masters....

:-(

[progressoid]

6. John Edwards had a great plan for cutting out the middle man in student loans.

Oh well.

[Twist_U_Up]

7. No money for schools but money falls from the skies for endless war.

Kinda like they plan things that way.
Just sayin

[nebula]

8. I would suggest studying in Canada

if the exchange rate weren't so terrible.

but the costs of a quality college education here are so low compared to the US,
it might still be a bargain for you even with the poor exchange rate.

[Heywood J]

23. The exchange rate really isn't terrible.

It's just that public higher education in Canada has different rates for residents and non-residents. Residents get about 50% of the cost subsidized, so if you're looking at the resident figure, double it. The university I attended was about $14,000 per year for non-residents.

[murielm99]

9. Are we sure that this is solely about the credit crisis?

Some big lenders have gotten into trouble for their illegal and careless student loan practices.

Maybe they want to get out of the student loan business because if they have to do it honestly it will not be profitable, or they do not want the risk of any more trouble.

[DFW]

10. My daughter graduated from her college last May, BUT......

The tuition for students in this year's freshman class is $50,000 a year.
I paid over 90% of that and wiped out what I inherited from my parents
paying for my daughters to go to college.

Even so, I'll be damned if I was going to request financial aid when so
many kids out there would have ended up at Starbucks if my kids had gotten
their scholarship money instead. But there has to be a better way to make
higher education available to American citizens. If this is the best we can
do, we'll end up with a wealthy educated elite and an angry class of intelligent
undereducated people who will be planning a revolution instead of a cure for AIDS.

[skepticscott]

12. One better way

to make education more easily affordable would be to go to a school where the tuition is a wee bit less than $50,000 a year. They do exist and they do offer quality educations, though perhaps not so status-soaked.

And fortunately, the government has started to get tired of having to dole out financial aid to students at schools that are sitting on gigantic endowments and still charging astronomical tuition.

[DFW]

18. They may exist, but they do not all take a chance on admitting someone like her

She grew up in Germany, and while very bright, those colleges who
look only at SAT scores do not get the whole picture when their
potential student does not score well, and some do not send reps to
far off places for interviews. She went to one of those few places
that did bother to send a rep for an interview, and find out that
she was bright enough to master English in a very short time if given
the chance. It was her desire to go to college in the USA as she was
interested in political science from our point of view. It took a LOT
of work, but she graduated cum laude in political science/public policy,
and may well stay in the USA to do some good. As it is, she has been
chosen by the UN to take part in a war crimes tribunal in Sierra Leone
this summer. It did cost a fortune, but it is what she wanted to do, and
we weren't going to deny it to her if we didn't have to. We didn't have
to, and so we didn't. The decision was that simple.

[skepticscott]

20. What about

all of those other kids that you were afraid of depriving of scholarship money? It's simply not the case that the only choices available to them are to pay $50,000 a year in tuition or work at Starbuck's. There are a lot of much cheaper options, and many of them have fairly relaxed admission policies.

[LiberalEsto]

11. I just tried to get a small loan for my daughter

and there is nothing available but variable rate loans. I really don't want to stick her with a loan that could go up sky-high. So we ended up financing her tuition from our meager savings.

You'd think the Misadministration didn't want young people to get educations or something.

Maybe they want our kids to join the Army and go get killed in Iraq.

[liberal_rxstudent]

13. I have to agree with that.

I have friends who are currently or were in the USMC and US army, and even they believe this. It is the only way to keep the poor and not-so-privileged youth from taking over- give them no resources for education, then let them make "their own" decisions about all of the glorious benefits of becoming part of the US military, which includes some tuition assistance. I would not have really believed it myself, but a few of my friends have explained to me that the money they receive from the GI bill isn't doing much since they are already poor enough to qualify for federal pell grants. How convenient...:eyes:

[conflictgirl]

14. Well I guess grad school is out of the question for me now

I just got my BA last year and haven't been able to find a job. All along I really planned on getting a Master's in Library Science so that I can be a public librarian, which is really my dream job. It's not going to be possible now. I have seen first hand what they mean about tightening the lending criteria - Sallie Mae let me cosign for my husband's supplemental private loans because my credit was marginally better than his, but when I just applied for a consolidation loan (through the same lender!) I was told that I'm not creditworthy and now need a cosigner of my own.

At this point I just hope my husband will be able to get enough fin aid to finish his degree since he only has a little over a year left to go...

[customerserviceguy]

21. Hate to be the turd in the punch bowl here

but over on credit crunch topics about housing, there's a fair amount of grousing about how "people shouldn't have overpaid for a house they couldn't afford anyway." Of course, there is the sentiment in the opposite direction that unscrupulous lenders shouldn't have lent them the money.

How is higher education really any different? The come-ons that some colleges use, especially those silly overpromoted "technical skills" institutions that practically promise you a job in massage therapy or whatever, are just as bad as a DiTech ad. If a family making $50,000 a year really shouldn't buy a McMansion just because some lender would let them in with a teaser loan rate, maybe some folks shouldn't have a bachelor's in sociology just because there is a federally guaranteed student loan program.

And you shouldn't need to have a master's degree to teach arithmetic to second graders, either. Education is just as much a potential rathole as speculative real estate is.

[0007]

22. Here we go again. I swear we can't get it right, can we?