Big changes came to the larger 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 had to scramble to find new lenders willing to service their student loans.
CampusDoor, students lender which was backed by the failed Lehman Brothers, had to see students that the private loans they had been approved กรอ for would not be funded. According to Sallie Mae, 70 private lenders have left the student loan market in 2008. Several of those lenders have suspended business in the larger education loan market and others have suspended loan programs with colleges that they consider to be always a high risk, however, many lenders have gone out of business all together.
Here’s what you need to understand to have the amount of money you will need to complete your educational goals:
Help is on your way
* The U.S. Senate passed the Ensuring Continued Use of Student Loans Act that may enable the Secretary of Education to buy loans from private institutions. This move should boost the liquidity of those lenders, permitting them to loan additional money 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 following the disbursement of funds. In the years ahead, parents will have the choice of deferring repayment for 6 months after students leave school.
* The newest act also increases the loan limits on fixed rate, no credit check Stafford Loans. This move was targeted at helping students conserve money by foregoing more costly 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, may be an option you will need to take into account with the rising cost of tuition. If you don’t have good credit, you may have to discover a co-signer.
Complete the FAFSA to qualify for the most of the financial aid available to you
* Higher education loan eligibility is determined in relation to the data contained in the FAFSA or Free Application for Federal Student Aid.
* Completing the FAFSA will determine your eligibility for grants scholarships and work-study along with student loans. Broadening your financial options is likely to make more funds designed 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 see you of their financial aid procedures and deadlines. They could also inform you of other types of financial aid, such as state programs of school based scholarships.
Understand that the unprecedented financial crisis affecting the larger education loan market is constantly fluctuating. The easiest way to make sure that you’ve the funds that you’ll require is usually to be informed of the changes and how they affect your financial goals.