Student Loans: Too Early to Call it a Crisis?
This post comes from Daily Blender host, R.K. Gella, as part of the b5mdia Business Channel’s April Scramble.
With the presidential campaign rhetoric ablaze with mortgage restructuring and lender responsibility, one issue that has escaped acknowledgement, at least for now, are the outlets parents have for their children’s higher education.
Student loan companies are claiming protection from bankruptcy and lenders are looking to the government for increased subsidy, making it more difficult for parents to lock down a loan. Students will begin to receive notification from their top tiered schools soon and parents have to wonder if any financial reassurance for the upcoming fall will be mentioned.
As for the present, lenders are being extremely cautious with granting loans causing some parents to worry. In the New York Times, some parents sounded off in concern of the tightening credit situation, especially when their previous lenders have pulled from the market.
“When I go to bed at night, I worry about it,” said Ms. Beaton, a single mother who is in search of a replacement lender for her daughters student loans. “If you don’t have the money, there you are, in a serious, ulcer state. You feel inadequate.”
However, not all are reaching for the fire alarm. The New America Foundation has stepped in dismissing the threatening “credit crunch” hype and in a post earlier last month, assured college presidents that federal loan money would continue to be accessible. In the New America Foundation’s assessment of the situation they said:
“Students with poor credit ratings, particularly those at trade schools whose graduates have poor repayment track records, might be unable to find a willing private student loan provider. All students, however, who apply for a private student loan with a creditworthy co-signer should be able to obtain a loan and obtain it at a lower interest rate than they otherwise would receive.”
Meanwhile, as the months get closer to next semester, parents prepare themselves anyway they can, even if it means financing against their home’s equity. But with the mortgage situation in the shape it is this may no longer be a wise or affordable prospect.
R.K. Gella would like to thank One Vote Matters for allowing him to be a guest on their site.
