The downturn of the 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 money may be going South. Student Loan companies, which used to give money under the Federal government backed student loans, are finding this is not worth their effort in the current state of the credit institutions.
Word of a state agency pulling out of providing college aid, has surfaced. This will affect 100 colleges and universities alone, and the fear exists that many more will become similarly affected. The reason behind this drastic move is cited as being the credit squeeze.
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 money will also become more expensive, as well as being harder to access.
The major source of college aid is a federal government scheme in which it backs loans to means-tested students. The student loans are often used for tuition fees and then a further private loan is usually needed to cover general expenses. It is these private loans which will become more difficult to obtain. As yet, there is no evidence to suggest that lenders are failing to support their obligations to the federal loans.
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.
It has been estimated that about 100,000 students will not qualify for private or government loans this year due to poor credit. Add to this the decreasing number of companies providing student loans, and there will be problems for many 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.
If Mom and Dad come up short and you find yourself unable to get financial 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! Yeah, 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 beer parties and ski trips. It all comes down to how bad you want to go to College.
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