Jan
14
Poor Economy Shuts Out Those Needing Student Loans
January 14, 2009 | Leave a Comment
United States college students are the latest victims as the global credit crisis worsens and financing from student loan companies dries up. American students who need a student loan to pay their way through college, are starting to have a tough time accessing funds. An unheard of number of public and private lenders have began to stop offering college aid, causing students hardship in finding student aid.
Word of a state agency pulling out of providing funds, 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.
Traditionally, money have been backed by some of the major US banks, including JP Morgan, Sachs Goldman and Citibank. These banks will no longer be supporting the auction system that allocated resources for money. There are also predictions that financial assistance will become more expensive.
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.
The current estimation is that 100,000 students will not qualify for the Federal government or private student loans because of credit rating issues. This, coupled with the reduction in the number of loans actually available, will make attending college difficult for many US 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 you find yourself needing a Student Loan but unable to get financial aid via the traditional route, then it’s important to start researching unconventional ways such as scholarships, grants or small loans. At the end of the day, a financially challenged Student may have to get an education the old school way…by working in College and paying for it their self.
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