Sorry about the delay between posts, loyal readers! I am not immune to the weak economy and I’ve been working double-time on my more commercially driven websites.
Colleges, students, and even student loan companies haven’t been quite able to escape the consequences of a lockup in global financial and credit markets. In fact, 180 students at George Washington University were just informed that their student loans had to be canceled mid-year.
The government has been scrambling to restore liquidity to these credit and capital markets, not just for banking and finance at large but specifically for student loan borrowers and lenders. A recent press release from none other than Treasury Secretary Henry Paulson and Department of Education Secretary Margaret Spellings states that:
President George W. Bush signed H.R. 6889, the extension of the Ensuring Continued Access to Student Loans Act. We appreciate Congress providing the Department of Education, in coordination with the Treasury Department and the Office of Management and Budget, renewed temporary powers to use federal funds to ensure students and families continue to have access to student loans.
The loan purchase and participation interest programs implemented over the last few months have helped ensure that Federal student loans were available to students enrolling in postsecondary institutions for the 2008-2009 school year, and Federal student lending is exceeding last year’s pace.
Our financing program has supported just over 40 percent of the Federal Family Education Loan Program (FFELP) loans that have been disbursed this year. Over 800 lenders have enrolled in our loan purchase program. Almost $51 billion of federally guaranteed loans have been originated for the current school year, up from approximately $45 billion for the same period last year.
This was released just a few weeks before National Education informed its customers at George Washington University that they’d be losing access to future student loan funds.
So despite all the government-mandated taxpayer spending – despite all the debt that students are taking on to keep going to school, there’s clearly no “order” and stability in the student loan market. If you’re looking for student loans, make sure to not only compare prices but also take a look at the reliability ratings you can find online. Don’t end up relying on a company that could just suddenly cut you off – this can lead to a huge mess in your transcripts and a hard time adapting back to the flow of degree completion. Diversify your tuition paying income – even if that means finding a few smaller scholarships to apply for and taking on a part time job. The less you rely on a single source, the better your chances of surviving the worst.
Be careful out there!