Student Loan Advice For 2 Year College Students In A Poor Economy
The evidence is that banks are forcing a split in college education by reducing the availability of student loans to some students, based on what college they attend. In the current financial crisis, the major banks have cut back the number of colleges they supply loans to and the ones that have been dropped are community colleges.
The reason behind the decision of the financial institutions is the current global credit crisis. Because it is harder to raise money, the banks do not have the funds to lend and so they have to cut down on the loans they offer.
On a brighter note, there are other lenders who claim they will continue to offer loans to all college students. Companies such as Nelnet and Sallie Mae have recently committed to continuing with the Federal government backed scheme and will lend to students attending any college. This is good news for those attending community colleges.
By far the best option for student loans is the federal student loan scheme. These loans have low fees, low interest that is fixed and is paid while you are studying. These government backed loans are available to all students regardless of their background or credit rating, and not dependent on the college they attend.
But there are students at community colleges that cannot access these cheap loans. Why? Because some of the community colleges do not support the federal scheme and this means their students cannot get the loan. These students have to make other arrangements to pay for their college tuition and expenses, and are often left with no other option but expensive private loans or credit cards.
The banks claim that these students are a higher risk category and more likely to default. Students at community colleges often come from low income families and should be entitled to cheaper federal loans. The colleges would be better supporting the scheme and teaching the students how to manage their finances and repayments.
