Credit crunch impacts private student loan lending

By Octavia Mitchell
Anchor / Reporter
Published: October 6, 2008

The credit crunch is affecting how students pay for college.  Some lenders have either canceled college loans completley for two year schools, reduced their funding, or tightened up restrictions, which makes it harder for students to get loans.

Ellen Green is the director of financial aid at Trident Technical College.  She says because tuition at Trident is not that expensive, less than 25-percent of students have to get private loans.  But those who do, are running into road blocks.  Green says, “Last spring semester, Citibank announced they cut lending to students completely, but they cut lending to all two year schools.  Students took a hit there and many of our students who had loans through city-bank we had to re-route them to other lenders.  We have seen students having more trouble getting loans this year.  We’ve had students that had to go to secondary lending.  They try to borrow through one lender and they can’t because they’re at a two year school.”

The tightening affects mostly out of state students at TTC .  Twenty-two-year-old Jacqueline Moss from Alabama is in the new opthalmology program at Trident.  She got a private loan for school a few yeas ago.  Moss says, “It’s out of state tuition too, so definitely I need that loan.  It seemed a lot easier they were more willing to give loans to students.  Now they require more to get that loan.  I feel it’s harder to go to school now.”

However Green says the news isn’t all bad.  She says, “The good thing for our students this year, the federal government is expanding the loan limit for the Stafford loans this year for the first time ever.  They got an additional 2-thousand dollars which was a really big help.”

It costs a little more than 16-hundred dollars a year for tri-county students to attend Trident Technical College.  More than 3-thousand-dollars for out of state students.  Officials say funds from the Education Lottery pay a large portion of tuition for students, and they use scholarships and loans to pay the balance and transportation and living expenses.

Financial aid experts say students should try to get loans through federally guaranteed programs, which usually have lower interest rates, before trying to get a private loan.