The global credit crisis 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 money may be drying up. Lenders, which used to dish out funds for college under the Federal government backed student loans, are finding this is not worth their effort in the current global credit crisis.
There are reports of a state agency has got out of a student aid 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 lack of support from financial institutions.
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 education assistance traditionally backed. Financial experts are predicting that funds for college 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 other area of concern is the growing number of families who have been caught by the mortgage crisis - many will have college-aged children. The people most affected by the disappearance of student loans will be low income earners and people with a low credit score, and families suffering with their mortgages are now included in this group. There will be a growing number of students who will be refused loans due to their parents’ credit rating.
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.
A Student needing financial aid should visit the counselor at the school of their choice. These counselors may be aware of scholarships or grants that are not widely known about. They also are a source of little know student aid that Students or Parents with poor credit may qualify for.
Always remember this, never get discouraged. 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. I know, this is an unpopular way of getting help, it’s still one of the best ways to come out of College with not student loan debt.
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