Wednesday, October 15, 2008

Student Loans Tough to Come by in Financial Crisis

by: Shana O'Malley

Hundreds of Ohio University students are going to have to find new ways to pay for tuition starting next year. According to the Ohio University Financial Aid Office, at least four major loan companies have pulled out of the lending business. The office says the companies will continue to finance loans that were taken out for the 2008-2009 school year, but they will not provide money for future school years.

The lenders are Campus Door, Wachovia, Education Finance Partners, and Key Bank, which is the second biggest lender to OU students. Campus Door was one of the only lenders that did not require all borrowers to have a co-signer. So, now, students will need to find someone with worthy credit, such as a parent, to help them obtain an alternative loan.

Since the summer, students who took out alternative loans with these four companies have been receiving notification from OU that they need to find new funding. Director of Student Financial Aid and Scholarships Soni Williams says the lack of lenders equals a lack of funds and she has important advice for students who need to find new lenders.

"You need to be getting on the hunt kind of early on, don't wait till the last second or you might not be able to find a lender in a timely manner," Williams says.

OU Financial Aid and Scholarships Director talks about student loan bailouts

Little to No Notice
Williams says most the lenders actually did students a favor by letting them know that they were going to stop providing. She says some banks just stop lending and don't let their borrowers know. Williams says other banks, like Wachovia, gave barely any notice.

"They called me in the afternoon one day and said we're stopping lending at five o'clock today, that's fairly short notice," Williams says.

She says students should make sure that their current alternative loan provider is planning on staying in business.

OU Freshman Corrine Garland says she has a student loan but doesn't know if it was with one of the companies that went under. She says the financial crisis is scary because she still has three years of school to pay for.

"I have three years left and I don't know what my financial situation is going to be," Garland says.

Where to Find Money
Ohio University's financial office offers a variety of options for students who need financial assistance.

- Alternative Loan Providers

- Grants

- Scholarships

1 comment:

Anonymous said...

OHU is a direct loan school that receives loans directly form the government. They have never allowed students to borrow lower risk FFELP loans from lenders directly.

OHU wants dump the high risk alternative loans on private lenders but will not give lenders a chance to lower their risk by lending to students on the FFELP side. You can not have it both ways. Help lower the risk and private alternative loans will come back.