Mother Talkers

It Is Hard(er) To Be A College Student

by Elisa

Wed Mar 05, 2008 at 09:36:05 AM PDT

Sorry to become the purveyor of bad news. But the credit crisis has affected so many people, including homeowners and now -- kids who want to go to college.

Another casualty of the subprime-mortgage meltdown are prospective college students who are finding it more difficult to take out a bank loan to pay for school, according to the Washington Post. And those students who really need the money, like those who attend community college or a trade school, are finding it nearly impossible.

Students seeking federally guaranteed loans, which are popular because they offer fixed, below-market rates, could be required to pay higher fees to borrow money, according to university finance directors and lenders.

An even greater burden may fall on those taking out private loans, which have become increasingly common as students look for new sources to finance the soaring costs of college. These loans often have variable rates, and they are projected to jump this year.

And at community and for-profit colleges, some students may be denied private loans entirely because the financial industry considers them riskier investments than their peers at other educational institutions.

Two of the nation's largest student loan organizations -- Pennsylvania Higher Education Assistance Agency and College Loan Corp. -- have stopped participating in the federal loan program. Other firms like Sallie Mae are tightening credit requirements for private loans.

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The growing exodus has some college administrators worried. Georgetown University, for one, has devised an emergency plan to become a direct lender, like hundreds of other colleges and universities, in case more firms close shop. Other colleges are calling lenders to see whether they'll be in business next school year.

Members of Congress last week asked for assurances from the Bush administration that the federal program providing loan money directly to colleges will be able to handle increased demand. They also asked the Department of Education to gear up its "lender of last resort" program, which provides a safety net should many student loan firms fail.

If they are counting on the Bush administration's word, all I gotta say is I am glad I am not a college student today. On the one hand, it is awful to graduate with debt -- especially if the interest rate is high. OTOH, if you come from a working class family that lives paycheck to paycheck what are you supposed to do if you want to go to college?

Tags: college student, credit crisis, Washington Post (all tags)

Permalink | 15 comments

  • I guess I was spoiled (0 / 0)

    All my loans came to me directly from my university. If you were trustworthy enough to be a student, roaming the facility, attending classes, etc, you were trustworthy enough for a loan. End of story.

    I had no idea that student loans had gotten to be such a private industry, with TV commercials (!) and some of the predatory practices. I can understand that some schools, especially public schools, might not have enough endowment to fund it themselves - but a school like Georgetown should have plenty of resources to make loans. I'm surprised they weren't already.

    by shenanigans on Wed Mar 05, 2008 at 09:51:28 AM PDT

    • BiL (0 / 0)

      had to take out loans to live on- his school didn't offer housing, it was a career-intensive school and he had classes, literally, 24 hours a day, so jobs were not really an option.

      The private loans kick in when the us dept. of ed decides that you've taken enough, despite your living situation / working / parent's make believe ability to pay.

      by lilianna28 on Wed Mar 05, 2008 at 09:58:39 AM PDT

      [ Parent ]

  • seriously (0 / 0)

    can we figure this out? Pretty please? We are drowning in debt. And on the other end of this nightmare spectrum? NO JOBS. You pay and pay and pay and go home and live with mom and dad because your loan bill is a higher than rent, but yeah, you're not really working either, so the money thing just KILLS you.

    by lilianna28 on Wed Mar 05, 2008 at 09:56:28 AM PDT

  • You don't even want to think about law school (0 / 0)

    There are no real loans available. My family is up to our eyeballs in debt, compounded by the fact that DH is a state employee because he believes in public service and isn't at a rat race firm. Sadly, that may soon be in our future. Its even worse for our pals that went into the Public Defenders office.

    by Suzanne77 on Wed Mar 05, 2008 at 10:45:24 AM PDT

    • 85K in law school debt here (0 / 0)

      I've been paying on it faithfully every month for 7 years and it's down to 83K. It's the loan that defies the laws of basic math. My car payment reduces the balance I owe on my car. My mortgage payment reduces my balance on my mortgage. My student loan payment appears to do absolutly nothing whatsoever.

      by minnmom on Wed Mar 05, 2008 at 11:04:46 AM PDT

      [ Parent ]

  • waiting to hear abour financial aid.... (0 / 0)

    I've diaried here before..About my DD

    She's already gotten some scholarship moneyI  She's a finalist at University Of Richmond for a full scholarship and if she gets into Swarthmore its loan free. I got a call Sunday night from a Bard parent( DD already has gotten in)I told her it will all come down to who gives the most money.She told me I was the third parent she had called that said that.My daughter will go to a state school rather than be in debt if she doesn't get merit money...

    I just read that the reason the Obamas managed to pay off their loans was that B Obama made money on his books....Otherwise they would still be paying...

    Sorry but tax credits dont help when you can't get loans or you are deep in debt..

    We need to hound these candidates about REAL SOLUTIONS!!!!!

    by Lee N on Wed Mar 05, 2008 at 11:22:05 AM PDT

  • State schools!! (0 / 0)

    We need to get away from the stereotype that state schools and community colleges are 'bad'.  If they are lacking in some aspect of education we should be working hard to make them better.  My parents paid for my state school, but even if they couldn't have, I would have done some community college and then I would have transferred.  I am doing really well for myself now in a PhD program.  Debt free!  Being paid to go to graduate school!

    My friends who went for a law degree have $150,000 in loans.  Sure I won't get paid as much when I am finished, but I also don't have that debt over my head.  Not saying people shouldn't become lawyers, but we have to figure out ways for that to happen with out loads of debt.

    Also, we really need to be pushing academic scholarship over athletics.  There are huge universities that bring in millions for sports and pour it back into sports, and yet someone who gets good grades and gives back to the college community gets nothing.

    by MoanaLiz on Wed Mar 05, 2008 at 11:44:08 AM PDT

  • Thank goodness for HOPE (0 / 0)

    In my state, we have the HOPE scholarship (funded by the lottery), which pays full tuition (and $150 toward books) to any public college in the state if the student graduates high school with a minimum 3.0 GPA (core classes only, unweighted GPA--no extra points for honors classes) and maintains an overall 3.0 while in college. My daughter is going to college this fall on HOPE, as are many of her friends. The program also provides $1,500 per semester to students wishing to go to private colleges in the state. It's not a perfect program, but it will help us save more than $5,000 a year and hopefully will enable her to start her post-college life debt-free if she can keep it for four years.

    by Fortyish on Wed Mar 05, 2008 at 12:22:27 PM PDT

  • In Louisiana we have TOPS (0 / 0)

    It's a scholarship that basically pays tuition at a state school or the equivalent to it to a private college in the state. Depending on your GPA you can also get a stipend that helps towards books & stuff. My daughter is getting ready to graduate from a state college & has gotten all her tuition paid plus a $400yr stipend that covered misc fees & books. She is able to think of grad school without worrying about debt from her undergrad years.

    The Hope credit on taxes helped too but we now make too much to get lifelong learning. Yeah, like that means we have more to spend!The extra income doesn't seem to have made it into cash but on paper we look like we make it. Anyway, the state scholarship plus 2 small ones from the college really helped.

    One thing to check out if you live in the southern US is the Academic Common Market. I had no idea about it til we were looking at grad school stuff. Here is the link. http://www.sreb.org/...
    Basically it allows students in certain areas of study to go to colleges out of state without paying out of state tuition if their program of study isn't offered in their area.The schools have to be in the academic common market but there are quite a few good ones.

    A friend of my son was graduating high school several years ago & gave my son some advice. He said if you can get a free ride to a state school with a decent program for your undergrad then do it. Save your money for a great grad school.This advice was from a kid getting a free ride to the Naval Academy because he was so smart.

    There are some state schools with smaller campuses in most areas. Our daughter goes to a state school in a small town but her actual college is within the bigger college. She will only have 10 graduating seniors in her college class. It is almost like a gifted class in high school except for the college level work & credit. What about satellite campuses that might be smaller?

    There definitely needs to be more resources for middle income parents. Most scholarships are need based & no matter how smart your child is they won't qualify if the income level doesn't fit.

    A friend that attended an Obama rally told me what Obama's plan offers is that each student will get $4000 a year for college but they have to agree to pay it back by service to the country. I agree with a payback doing service but how can a person go to college for 4 years, get a degree with a potential of earning a good salary & then have to do Peace Corps or other community type jobs that will earn them considerably less for a specific number of years? If Johnny got the $4000 a year & upon graduation with a degree in computer science had the potential job offer of $45,000 a year could it be practical that he would have to pass that up to work in something like a community program making $25,000 to repay his "debt"? He would have been better off to take the higher earning job & then repay the $4,000 a year.

    I don't know the answer but saddling our kids with a massive debt for college can't be right.

    by alicetben on Thu Mar 06, 2008 at 05:14:20 AM PDT

  • i've always wondered about this... (0 / 0)

    I think education is overpriced and that an educated population is a good thing.  But at the same time,  it seems unfair to provide grants to people who then go on to earn a fair amount of money, and then they vote for people who don't believe in tax increases or education funding.  Or is it that people who received grants are more likely to support policies that make education cheaper for the masses?  

    by smurfett on Fri Mar 07, 2008 at 07:02:19 AM PDT

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