Student Loan Advice For College Bound Kids In A Down Economy

By Bryce Q. Jarwoski

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.

There are, however, some lenders who are still providing student loans for college students. Some companies have made an ongoing commitment to support the federal government-backed student loan scheme. Sallie Mae and Nelnet will offer loans to all college students, irrespective of the college they attend. This is welcome news for students of 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.

If this is so, then why are some community college students unable to get one of these student loans? It appears that there are some colleges that do not participate in the scheme, and this disqualifies the students from the loans. These students are forced to resort to other, more expensive, methods of finding money to pay for their college education - and they are often the ones who least can afford this.

Lenders claim that community college students have a greater risk potential; but instead of denying them cheaper federal loans and possibly creating a greater debt problem by forcing them to find alternative funding, the schools should offer guidance in repayment options, to make federal loans a safe option for lenders.

About the Author:

Over at Student Loan Guru, we answer Student Loan questions from actual College Students around the Country. Whatever your question, chances are we can answer it. For example, one of the most common questions we hear is: "Will a student loan affect my chances of getting a mortgage". You'll find these and other answers at our site.