Community College Students Have Gloomy Outlook For Student Loans
Banking institutions are reducing the number of colleges they provide student loans to and most of those cut are community colleges. It seems as though those attending the expensive, elite colleges will continue to have access to student loans. It would appear that college education is being split by the lack of availability of student loans to some students.
The reason the banks have had to curtail their student loan numbers is the current difficulty in raising money for lending. Because they cannot raise funds to the same degree as before the credit crisis, they do not have the money to lend.
The good news for community college students is that other companies are still lending money to finance college education. These include Sallie Mae and Nelnet, both of whom recently committed to providing federal government backed loans to all students, regardless of the college they attend.
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.
Lending institutions will claim that students attending community colleges present a greater risk of defaulting on the loan, and can probably prove this. Instead of forcing these students into greater debt by not allowing them a cheap federal student loan, the colleges need to educate the students on responsible borrowing. This would make the scheme more attractive to lenders.
The reason the banks have had to curtail their student loan numbers is the current difficulty in raising money for lending. Because they cannot raise funds to the same degree as before the credit crisis, they do not have the money to lend.
The good news for community college students is that other companies are still lending money to finance college education. These include Sallie Mae and Nelnet, both of whom recently committed to providing federal government backed loans to all students, regardless of the college they attend.
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.
Lending institutions will claim that students attending community colleges present a greater risk of defaulting on the loan, and can probably prove this. Instead of forcing these students into greater debt by not allowing them a cheap federal student loan, the colleges need to educate the students on responsible borrowing. This would make the scheme more attractive to lenders.
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