By: Gaurav Bhola, MSM, Managing EditorCollege and university loans are in the news again due to the current environment of credit tightening. The recent credit liquidity concerns have transcended to the arena of higher education financial aid loan programs, as college students and their families raise concerns about access to loans. Students looking for supplemental education loans to attend universities, community colleges, and trade schools may feel the residual effects of the larger liquidity crunch.
The Department of Education has taken active measures to soothe the unsteady secondary market for federal student loans. But there are more opportunities to provide loan security to college students. However, students have alternatives to federal college loans in the way of private college loans. Private loans are unsecured student loans offered by loan lenders such as, banks and other private lenders.
The private loans can be used to pay for current college education as well as, to pay for past grants and federal Stafford loans. Stafford loans are managed through Sallie Mae in collaboration with participating private lenders, providing up to $23,000 per dependent university student for over four years of school. Even though Stafford loans are federally guaranteed, some lenders are exiting the student loan market due to liquidity concerns.
The federal government has taken steps this year to make sure liquidity concerns don’t affect the issuance of loans to students. Congress is concerned about unnecessary hurdles being created for students, which may inadvertently hinder their continuing education. Recently, Congress passed legislation due to being signed by President George Bush that permits the Department of Education to boost liquidity into the federal loan system through bond auctions.
The initiative eases qualification standards for homeowners and parents with medical bills, and offers these parents the capability to start repaying supplemental loans after their children leave college. Congress has worked diligently to get the legislation through, even with stiff opposition from the Republicans.
The mood of the majority of the Congress is resolute in providing fair higher education funding to students. They want all options available to schools and students in terms of federal and private loan lending. The positive step by Congress to stave off a possible student loan crunch has been welcomed by the American public. It shows that our elected officials are committed to students and their higher educational efforts. After all, the future of our nation depends on a well educated workforce.
