Student Loans Latest Casualty of Credit Crunch
High school seniors and their parents have a lot more than acceptance letters to worry about right now.
Recent college grads are worried about more than finding a good job offer.
And working professionals who count themselves among the two-thirds of college graduates with college loan debt may have even more worries.
Because student loans - which have become the American way of life for financing the astronomical costs of upper education - have become the latest victim of the credit crisis and the worsening of the U.S. economy.
Loans More Expensive, Harder to Get
As previously reported, students loans are getting more expensive.
Prospective college entrants are faced with tightened lending standards by Sallie Mae, the largest student lender.
About 50 other lenders are no longer writing student loans.
Just this week, The Education Resources Institute (TERI), the oldest and largest U.S. non-profit guarantor of private education loans, announced that it has filed for Chapter 11 bankruptcy. In addition, the College Loan Corporation has opted out of the federal loan program, joining some state agencies in suspending federally-guaranteed loans.
A full one-third of the top 100 student loan lenders are no longer writing loans.
This means fewer available and more expensive college loans, even for those who saved money for college, but need to supplement their savings with loans.
Congress Stepping In
Legislation was approved by the House of Representatives that would let the Department of Education buy federally guaranteed loans that lenders are unable to sell to private investors. Lenders would be able to sell their debt at a premium in order to give investors more confidence in securities backed by the loans.
In addition, the proposal would increase by $2,000 the amount of money students could borrow each year as well as the total amount overall that may by borrowed. The Senate has introduced a similar bill.
The Bush administration has voiced its support of the efforts, while making recommendations to make sure that the Secretary of Education has "the necessary authority and flexibility needed to respond to this unfolding situation."
It is estimated that$68 billion in federal loans will be sought by roughly seven million borrowers for this academic year. Concern is that not enough loans will be available from traditional sources without some action from the government.
Lingering College Debt
Repayment of college loans impacts the financial situations of both new graduates and those who have been out of college for some time. In some cases, individuals may find themselves having to choose between making a college loan payment or a mortgage payment when faced with too many bills due all at the same time. Many others are struggling with huge increases in their adjustable rate mortgages.
So if you are seriously troubled by your college loan debt as you assess your personal financial situation, take action and talk with a Total Bankruptcy sponsoring attorney!
Let a local bankruptcy attorney help you examine whether filing bankruptcy may be able to help you with your current financial situation.
Our number is 1 (877) 349-1309. Call to connect with one of our sponsoring bankruptcy lawyers.
