Boston Globe: Credit crisis hits student borrowers

[marmar]

Credit crisis hits student borrowers
Short of funds, lenders cut back

By Beth Healy
Globe Staff / April 17, 2008


Anthony Norton, a junior at the University of Massachusetts in Boston, just learned a tough lesson in economics:

The credit market crisis is spreading to student loans.

Norton thought he was set when he deposited a $16,000 student-loan check to pay for summer classes and the fall semester. But when he started to pay bills for classes, rent, and other expenses last week, his checks bounced.

He was one of 500 students left in the lurch with the April 7 bankruptcy filing of The Education Resources Institute Inc., a Boston nonprofit that guarantees student loans. And his ordeal is only the latest example of chaos in the college loan market. More than 50 firms have abandoned or cut back their federal or private student loan programs this year, unable to raise money in the financial markets. Yesterday, Citigroup, one of the largest private lenders, said it would stop lending at some schools and end its federal loan consolidations.

While families used to secure student loans almost regardless of their credit history, "Those days are over," said Tony Erwin, director of financial aid services at Northeastern University in Boston and president of the Massachusetts Association of Student Financial Aid Administrators.

As students and parents begin the process of applying for financial aid and loans for the upcoming school year, Erwin warned, loans are going to be harder to come by and more expensive: "It's going to be a problem. There's no question about it." ......(more)

The complete piece is at: http://www.boston.com/business/personalfinance/articles/2008/04/17/credit_crisis_hits_student_borrowers/?rss_id=Boston.com+--+Latest+news

[Winterblues]

1. During Clinton's term School loans were given by the Government at very low interest.

Bush* and Republicans changed that because their banker buddies weren't getting a cut...