By Samantha Manning
University students are feeling the blows of our national economic recession first hand, as a number of them find that they are unable to receive the funds to attend the University because they have been denied student loans.
According to collegeboard.com, the number of students requiring student loans has steadily increased over the past decade. For the 2007-2008 academic year, U.S. college students borrowed $86.7 billion in loans, including non-federal loans and PLUS loans, as well as unsubsidized and subsidized Stafford loans.
While the number of students in need of loans continues to increase, the amount of private loans that lenders are willing to give to students certainly is not. As a result of a high number of students defaulting on student loans after graduation, top lenders like Sallie Mae have enforced stricter guidelines when lending to students by cutting private loans to borrowers with below prime credit ratings. Sallie Mae also no longer offers the option to consolidate student loans, because the company deemed it “uneconomical,” as stated on their website.
A major issue emerging from this new trend of stricter standards by lenders is that college students may not even be made aware of their limitations until it is too late. Lenders cannot give funds to a student until a minimum of ten days before the start of classes. This creates the problem of students overestimating the amount granted to them after it is too late to drop classes or enroll elsewhere; a problem all too familiar on the University’s campus.
University junior Jennifer Joas, received $50,000 in student loans from Education Finance Partners in California for her freshman and sophomore year. However, in the wake of the rapidly declining economy, Joas was denied that same loan in the start of her junior year. “This year when I was already approved for a loan I got a notice that the company shut down and could no longer provide me with money for school,” Joas said. She only discovered that she was not receiving those loans after she already moved into her dormitory on campus.
University junior Craig Holmander, also experienced difficulty in receiving the full amount needed to cover the University’s tuition. His twin sister Bethany was granted the full amount that she requested from the Rhode Island Student Loan Authority, but Craig had to find an alternative outlet because the family was given a maximum amount to borrow. During his first two years at the University, Holmander says the company always gave him the full amount without a problem.
“Because I applied first, I was granted what I needed but my brother had to go to a private institution with a higher interest rate because of the family limit,” Bethany said.
There are also students like sophomore Michelle Bond, who had to transfer out of the University because of a lack of funding. For her freshman year and the first semester of her sophomore year, Bond received federal loans and small grants. By her second semester of her sophomore year, she was notified that she was not approved for that same loan this time around. As a result, Bond has attended Westchester Community College for this semester.
“It’s just frustrating for me because I only have my mother supporting me… we only have the one income,” Bond explained.
Bond does plan to attend the University for the Fall 2009 semester, as she is seeking private banks for her loans.
According to the University’s website, the office of financial aid suggests that students apply for education loans, such as Perkins or Stafford. Other options for students are to apply to private scholarships and grants. At the press time, representatives from the offices of Financial Aid and Student Accounts were unavailable for comment.
Federal efforts to help students pay for school are also underway. The Obama administration has announced its plan to increase grants on a need-basis and expand federal loan programs so that more families can participate.
(Cortney Vamvakias)