Credit crunch takes toll on student loans

[flashl]

For those lenders continuing to operate, the credit squeeze means that costs are rising.

"The cost of capital has gone up for everyone," says Rose Martinelli, associate dean for student recruitment and admissions at Chicago. "It's really pricey."

With many people in the US out of work, lenders are concerned that students and recent graduates may default on loans in the short term, which compounds their costs.

The cost of loan repayment is particularly high for students from outside the US who apply for loans from US institutions. This is because credit references are not required and also the lenders find it harder to track down students on graduation if they return to their home countries.

International students can expect to pay interest of about 7 per cent on their loans compared with about 4.5 per cent for domestic students in the US. MBA students need to budget for costs of about $150,000 to complete their programmes.

FT

[Adsos Letter]

1. Tell me about it...

My eldest daughter and her husband will both be completing Medical School next year...and will owe almost half-a-million between them.