Lenders Cut Back On Student Loans
Many Private Financial Institutions Are Choosing Not To Finance Educational Expenses
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Student Loans Hard To Come By
A rising number of banks and public lending authorities are cutting off loans to college students. With school approaching, students and families are scrambling for alternatives. Bianca Solorzano reports.
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Richard Evans is a freshman at Boston College. When his private loans for his first semester fell through, Evans and his parents had to scramble to make up the difference. (CBS)
Incoming freshman Rich Evans says the sky-high tuition for his next four years at Boston College will be worth it.
"I'm not paying $200,000 for an education," said Evans. "I'm paying $200,000 for an experience."
But his excitement turned to anxiety when Massachusetts Educational Financing Authority - or MEFA - announced it could no longer offer private student loans.
Just four weeks before the start of school the not-for-profit lender, which offers lower interest rates, put the word out to 40,000 families, many of which had to scramble to find cash.
"With those bills and the tuition coming due and hanging over your head, it does put you in a bit of a panic," said Betsy Evans.
Hundreds of thousands of students are feeling the credit crunch this month, as lenders struggle to capitalize loans. On top of that, congress cut subsidies for federal loans, making that business less profitable for banks.
More than 120 lenders have dropped out of the federal loan program. And this week, Wachovia bank, the sixth largest student lender, suspended its private student loan program for undergrads, Solorzano reports.
"Many families thought they had their financing all arranged," said Kalman Chany, author of "Paying For College Without Going Broke". "Only to find out the lenders they've chosen are no longer going to be offering loans this fall."
Betsy Evans is finding that federal loans are available, but at a higher interest rate. The best private rate she found was 2 percent higher than MEFA, but at a variable rate - an option that experts discourage for students
"Some of these rates have no caps which means if interest rates rise, you could be up to paying 15 to 18 percent on these loans," Chany said.
The Evans are likely to settle on a home equity line of credit - which comes with a low fixed rate -and tax deductible interest, but now their house is on the line, and with two more kids going to college, Richard will be expected to pay back the loans
"Richard is going to be burdened with a mortgage," said Peter Evans. "You know, when he comes out, so it's very scary."
But for Rich the freshman, that's four years and a college lifetime away.
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See all 56 CommentsJust imagine. That money could have put millions of young Americans through college.
Food for thought for all the Bush and McSame supporters.
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And provided medical care for senior citizens and uninsured or under-insured Americans.
Contrary to the quote of the student above, student life is not meant to be a lavish social "experience", but the purpose is to learn something.
People are making themselves slaves. If families obtain loans to ease the burden, great. But we should plan ahead and be prepared to take care of OUR OWN business.
For instance, choosing an affordable community college, and working to build up financing to pay off the completion of their degrees at the fancier places, if one insists.
I know people who, like myself, live in small apartments, find colleges at low tuition, or at least installment payments while we work. Oh, it doesn''t hurt to cutback on Starbucks, restaurants, or those add-it-up costly daily meet-ups with friends.
Good planning, common sense, and choosing a simple lifestyle will accomodate college, and it literally pays off in the beginning as well as the end.
You can''t blame banks for backing away from student loans. I swear that 90% of people I know blatantly defaulted on their student loans because it''s not like they can repo your college education. Plus, you can defer them like crazy, especially if you stay in school (thereby racking up even more student loan debt). It''s just not a "business smart" move.
I hope that when it becomes less easy to borrow money for college, colleges will in turn take a look at their absolutely unnecessary tuition rates and make a change.
There is no education like a real-world one.
College is sometimes a joke. Whatever you do, pay as you go. No loans.
we don''t have the money for people to get educations!
In other words, there''s money available for destruction and murder! There''s money for corporate welfare in the form of bailouts! But, there''s no money for people to learn job skills and knowledge that is then applied to make things and improve society?!
Now, what the h3ll is wrong with this picture?! Does anybody else see it? Or, have you all gone ''daft?
We are ON THE WRONG HIGHWAY, MOVING IN THE WRONG DIRECTION! I suggest to you all that''s time to turn onto another highway, BEFORE it leads us over a cliff!
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Yeah, maybe! But prices are sky-rocketing now compared to a percentage of wages! It''s a lot harder now to keep up! You got more for your dollar when you did it!
With all the debt Bush and the GOP has run up, the dollar is becoming worthless!
Posted by onemoretim at 06:18 AM : Aug 11, 2008
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They''re SURE trying! :)
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"Bop early and Bop often." --Alphonso Carponzo
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Let them know how you Bopping feel!!!
"Bop early and Bop often." --Alphonso Carponzo
America is run for the benefit of rich Republicans. They don''t need some dirty, unwashed masses of vassals contaminating their little darlings at college.
The children of the permanent slave class needs to understand their purpose in life--to work long hours at minimum wages, in competition with imported coolie labor, so the wealthy can maintain their lifestyles.
Then the fascist state the Bushites have worked so hard for will be a reality.
The Bush Plan is complete, ensure that employment in America is impossible without a college degree and then ensure that the military is the only way for most to pay for it.
Posted by GOP_forever
How many 18 year olds do you know of who have just graduated from high school AND have saved enough money for college?
The GOP, Home of simple answers from simple minds.
When I lived in California, because of the Community College network, higher education was practically free (for the price of your books - this was years ago). When everyone has their degree, you have college graduates working all the entry level jobs that used to be held by high school grads or dropouts. I had a Phd working for me as a data entry clerk.
If you are going to school so you won''t have to grow up and take responsibility for your own life, then school isn''t going to help what is wrong with you.
It''s bad enough to have to pay the most for an education let alone not being able to borrow the money to get it.
True, but this is happening from the graduates in India and such. College is basically free (or at least very cheap) and a master''s degree is a dime a dozen.
Now we have US Companies requiring at least a masters before they ever consider your resume and the pay is just over minimum wage...
How can we compete? Have to pay a fortune for college and not get enough to live on...
It''s almost like the Republicans, party of Traitors, wants to sell America''s soul for money.
I agree......students should go to class and not take these internet diploma mill programs from Troy, Phoenix and Webster.....
I recently looked at higher education. Even at other fields. To get an Associates Degree would cost $40,000. In graphic design, the available jobs fetch $30,000/yr. Those jobs are going overseas anyway, and common sense says not to get education in a dying field. (Duh!) Seveeral months ago, CBS News also had a nice article on the future of such jobs -- I printed the article and sent it to the schools I looked at. They were dumbfounded and had no clue -- proof what they were training could easily be accomplished by downloading the trial software and buying a $40 book.
Most jobs don''t need college education, and if everybody had Masters degrees, anyone who thinks poverty would disappear is a *** fool. Techrepublic.com has a great article entitled "The Education Scam". Look it up.
* "70% more than what high school grads" is what''s claimed for those with college degrees -- yet it''s still 70% more than the minimum wage, which still isn''t even a living wage; never mind being able to pay any of the loan back. So why give money to greedy administrators, who wouldn''t give a carp about the quality of the education?
And that''s my own conjecture.
Posted by GOP_forever
A college education should only be available to those who can save up and afford it. Those who need money should work and save for it.
Posted by GOP_forever
Given what jmurrietal said, you are for a fascist state where only the wealthy are allowed to live?
I agree with what he said too, and maybe I''m missing some context or even sarcasm from your posts.
But what I think makes a society is a person willing to work in it, to put their God-given talents into use and to live a decent quality of life, personal time, and if they wish, family time to raise a family in return. That is freedom.
The truth is, they are loans, bearing interest, that must be paid back over time. In fact, student loans are much more difficult to discharge in bankruptcy than are usual loans, such as credit cards.
The students who take out these loans will be burdened with them for years.
But maybe the Republicans prefer that everyone be ignorant and easily led.
Let''s not forget all those "third world" countries where the talented are educated at state expense, because of their value for the future.
But the sad truth is, Republicans don''t seem to care much about the next generation, whether it''s "pump all the oil now" or "let the poor kids have careers at Walmart".
Sad.
[Posted by jamesm12341 at 12:41 PM : Aug 11, 2008]
looks like you missed out as well ... you''re missing the apostrophe in the word don''t above. no biggie ... but seeing you''re so focused on everbody''s grammar, spelling, and what education level they may have ... it seemed only appropriate.
[Posted by Element51 at 02:28 PM : Aug 11, 2008]
it''s not an image.
Signed,
A student on loan, living responsibly so that others will also be able to benefit from the programs.
(Oops, my efforts are for nothing, thanks to the brats who want fancy degrees and don''t want to work to help pay their way)
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