Big changes have come to the higher education loan market as a result of the Wall Street melt down. Long before the pyrotechnics of failing lending institutions and government bailouts, many students have felt the credit crunch because they returned to school to find that they’d to scramble to find new lenders prepared to service their student loans.
CampusDoor, a student lender that was backed by the failed Lehman Brothers, had to share with students that the private loans they’d been approved กรอ for would not be funded. According to Sallie Mae, 70 private lenders have left the student loan market in 2008. Some of these lenders have suspended business in the higher education loan market and others have suspended loan programs with colleges which they consider to be always a high risk, however, many lenders have gone out of business all together.
Here’s things you need to learn to get the money you’ll need to perform your educational goals:
Help is along the way
* The U.S. Senate passed the Ensuring Continued Use of Student Loans Act that may permit the Secretary of Education to buy loans from private institutions. This move should boost the liquidity of the lenders, letting them loan more cash to students.
* The Ensuring Continued Use of Student Loans Act also changes the terms of repayment for PLUS loans. Under the current terms, parents must begin repayment 60 days after the disbursement of funds. Moving forward, parents will have the option of deferring repayment for 6 months after students leave school.
* The newest act also escalates the loan limits on fixed rate, no credit check Stafford Loans. This move was targeted at helping students cut costs by foregoing higher priced private student loans.
Creditworthiness is essential
* Guard your credit! As lenders work to shore up their bottom lines, credit worthiness is paramount. Alternative loans, which are credit based, might be an option you’ll need to consider with the rising cost of tuition. If you don’t have good credit, you may have to locate a co-signer.
Complete the FAFSA to qualify for the all of the financial aid available for you
* Higher education loan eligibility is determined based upon the information contained in the FAFSA or Free Application for Federal Student Aid.
* Completing the FAFSA will determine your eligibility for grants scholarships and work-study in addition to student loans. Broadening your financial options is likely to make more funds readily available for education expenses.
* Be sure to contact a financial aid adviser at the college or career school that you intend to attend. Schools are expected to share with you of these financial aid procedures and deadlines. They can also inform you of other forms of financial aid, such as for example state programs of school based scholarships.
Understand that the unprecedented financial crisis affecting the higher education loan market is continually fluctuating. The best way to make sure that you have the funds that you’ll require will be informed of the changes and how they affect your financial goals.