U.S. Signals Student-Loan Shift

[Jubilee21]

http://online.wsj.com/article/SB120735323800991299.html?mod=hpp_us_whats_news


U.S. Signals Student-Loan Shift
By ROBERT TOMSHO
April 5, 2008; Page A3

The U.S. Department of Education has decided to detail its plans for providing emergency student loans, in a sign that its planning for possible disruption of the market that supports college financial aid may be taking on greater urgency.

Despite pressure from congressional leaders and state-level loan-guaranty agencies, the department had previously indicated it didn't see the immediate need to provide such guidance for the last-ditch element of its "lender of last resort" program. In a March 26 letter to student-loan guarantors, the department said it would offer such information if the need arose. (more)

SHAKY AID


• The News: Education officials will detail plans for providing emergency student loans.
• A Shift: Officials hadn't seen any trouble for students in getting federally guaranteed loans from private lenders.
• Opting Out: More than 30 private lenders have said they will stop making such loans.But in an interview Friday, Education Secretary Margaret Spellings said details on when the emergency loan system might be triggered and how it would work will be released "in the next week or two."

Hit by an economywide credit crunch and cuts in federal subsidies, more than 30 private lenders have said they will stop making FFEL loans. This week, two major lenders -- NorthStar Education Finance Inc. and CIT Group Inc. -- join the ranks of the dropouts. The FFEL program is the largest source of student financial aid, supplying 7.5 million students and parents with $91.8 billion in federally guaranteed loans in the current school year, according to government estimates.

The picture for loans to cover tuition for the school year beginning next September is less clear. Families are just beginning to get financial-aid notices from schools, starting the borrowing cycle that typically peaks in July and August. Education Department officials have repeatedly said they are monitoring the student-loan market closely and haven't found any indication that eligible students have been unable to get federally guaranteed loans from private lenders.

Guaranty agencies, which would administer the last-resort loan program, were caught off guard but pleased by the heightened attention to the emergency loan system, which has never been used or tested.



Can't be good when we can't afford to educate our own future generation :rolleyes

[saulteux]

My guess is that a lot of those loans are defaulted, especially the ones made to students who have recently graduated.

It's pretty tough to find a job within 6 months of graduating from college, when job loss numbers for March were 80 thousand.

[lilbitsyspider]

My guess is that a lot of those loans are defaulted, especially the ones made to students who have recently graduated.

It's pretty tough to find a job within 6 months of graduating from college, when job loss numbers for March were 80 thousand.

Not just default. I graduated from college 5 years ago, and I'm making less with a degree than if I just never went at all. I'm almost out of my deferment time, if I didn't have a husband who made enough to make the payment, I wouldn't be able to pay it and live.

[L8DBUG]

I work for a non-profit student loan agency. There is a lot of buzz around the office because we found out Friday that one of the big lenders quit doing consolidations and so did we, so we have a department of people who will be moved to other areas. There is some uncertainty in our industry, to say the least.

[I'm all 67X]

Not to mention college is the new 10th grade...making it all just a for profit venture...


(ooops, sarcasm again...)

[Jubilee21]

I work for a non-profit student loan agency. There is a lot of buzz around the office because we found out Friday that one of the big lenders quit doing consolidations and so did we, so we have a department of people who will be moved to other areas. There is some uncertainty in our industry, to say the least.

Here in PA, this news hit a few weeks ago, but I doubt a lot of folks gave it the attention it was warranted at the time..I am sure its going to have some impact along with the fact annual tuition costs will be raised higher and announced about the same time folks catch wind of this.

One silver lining about being older, my kids are done with college at least from my end of being involved..this would have driven me more nut's than rumors claim I already am!:twitch

[L8DBUG]

Yes, we heard about them too. I think they are PHEAA. If you go to http://www.finaid.org/loans/lenderlayoffs.phtml
there is a list of lenders that have suspended making loans, quit making them all together, and a list of lay offs. I don't understand all the ins and outs of it, but I feel like it is going to be a long road ahead.

[Jubilee21]

Yes, we heard about them too. I think they are PHEAA. If you go to http://www.finaid.org/loans/lenderlayoffs.phtml
there is a list of lenders that have suspended making loans, quit making them all together, and a list of lay offs. I don't understand all the ins and outs of it, but I feel like it is going to be a long road ahead.

Yep! that would be PHEAA. Am keeping you in prayer that you are able to keep your job and do not suffer from the fallout of this in any way:hug

[romans224]

Also take in consideration the cost of college. For some degrees you need courses which have nothing to do with the career, however you need the credits. This is more of who decides what and not really caring what the impact it has on those who can't afford schooling. Then when you do graduate like some said no one wants a newbie, but rather experience is what many look for.

[L8DBUG]

Yep! that would be PHEAA. Am keeping you in prayer that you are able to keep your job and do not suffer from the fallout of this in any way:hug

Thanks, Jubilee21! I know that God is in control, no matter what happens. :)