Will The Student Loan Crunch Make It Hard For You To Attend College?
What's a Recession?
Whether or not you believe we are in a recession or not, it’s no
argument, we are in a credit crunch.
That being said, the primary question students and potential students are asking themselves is this, “Will this
tightening of the dollar keep me out of college?”
Make no mistake about it, this tight money market is having an impact on decisions people are making concerning
Some students slightly panicked when they heard various lenders were dropping out of the student loan
So what’s going to happen and should you be concerned?
Education Secretary Margaret Spellings has a “Plan B” on standby if student loans fall out of sorts.
She is seeking to quiet the concerns that the tight credit market might make it difficult for students to get
Spellings said in an interview, that her department had reviewed the law and concluded that it has the authority
to quickly free up money from the U.S. Treasury, if needed, to finance student loans.
She said the money would be provided so that guarantee agencies (non-profits that traditionally back student
loans issued by banks) can offer loans directly in the event that we end up in a credit crunch jam.
Spellings said she was clarifying her authority to do that because there had been confusion about whether she
would first have to go to Congress and seek legislative action before going to the Treasury. That could be time
consuming, and legislative politics could cause further delay.
Students, financial experts and lawmakers are worried that the nation's ongoing credit crunch may make it even
harder for students and their families to find student loans. Due to the weak dollar, nearly two-dozen lenders have
dropped out of the federally backed student loan program. Thankfully, that hasn't been a problem thus far, because
those abandoned ship aren't the biggest providers and others have stepped in to fill the void.
Spellings cautioned, she was only providing a safety net in the event the federal government's help is needed.
She likened it to preparing for a hurricane that might, or might not, hit. "This is the equivalent of staging food
and water," she said.
Students are figuring out now where they are going to college in the fall and will seek financing in the coming
months. Experts predict the impact of the tight credit market on students will become clearer sometime around this
Joe Elliot of Student Loan Whiz, advises all students and parents to make securing financial aid a top priority.
Says Eliot, “Don’t wait until the last minute; now is the time to seek scholarships, grants and other sources of financial aid.
If those avenues don’t fund your education entirely, you should have enough time to process your student loan application in time for the up
coming school year.
Elliot says he’s thrilled with the fact that Education Secretary Margaret Spellings had enough forethought to
avoid a potential student loan shut down. The announcement made by Spellings should calm the fears of most aspiring
The welcome and much needed statements came a day after Massachusetts Democrat Edward Kennedy, the chairman of
the Senate education committee, introduced legislation seeking to ensure students would have money to pay for
Due to the earlier confusion about the education secretary's authority, the bill includes language stating that
Spellings can go directly to Congress to free up capital for college loans.
Kennedy's bill also would improve the terms of loans parents take out for their children by allowing repayment
to be deferred while students are in school. The legislation also would increase tuition grants to the poorest
California Democrat George Miller, the chairman of the House education committee, said he plans to introduce
similar legislation next week.
If you are seeking financial aid, don’t let the credit crunch derail your educational dreams. There is
money for college out there and with the help of the Student Loan Whiz,
you’re sure to get the money you need.
Brad Matheson is a professional Financial Consultant who specializes in helping businesses and individuals
resolve their debt issues. He believes that all debt problems can be solved with the right debt advice and aspires
to help Americans learn all of their debt options and exercise all of their rights. Says, Matheson, “Don't allow
the Student Loan Debt crisis or a Defaulted Student Loan to hinder or block
your career aspirations or stymie your financial dreams, There is Student Loan