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!

4 Responses to “Despite Government Spending, Some Student Loans Vanish”

  1. I think its all about the financial and economic crisis that has destroyed so many student funding programs not only in the US but also in Canada. There is a program call CanHelp which are now starting to stop some of their fundings. this happens because there main sponsor is Wachovia of North Carolina and since it taken over by another big bank the flow of cash or funding has stopped.
    So as you said even with all the assurances from teh government, it is still goes to the bottom line. And the bottom line is these banks and financial isntitutions will fix their end first before they can start to implememnt what the government has stipulated it shoul do.

    just my take on the subject.
    Student Loans

  2. Yes, this global crisis hits many aspects. It is sad to hear about it. Hope the government can fix this and put all back together again. So many people could be save

  3. Student loans are important because if we don’t have those then people will be out of school and then not contributing to our economy in any way. Things need to change around here and the economy needs fixed, but not the way the gov wants.

  4. Sad that it’s so hard to secure financing for an education. It’s an investment into our future.

Leave a Reply

You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>