Lenders Trim Student Loans To Community College Students

Although tuition for most community colleges is quite low, many students still need to take out loans to pay for their education. These loans are sought by some of the most financially neediest students, people who would otherwise not be able to attend college without some sort of assistance.

The past year has been a difficult one for many lenders who were hit hard by the sub-prime mortgage mess. To reduce their exposure to bad loans, many creditors have tightened up lending restrictions particularly when it comes to providing private student loans.

This past Monday, The New York Times reported that several banks have closed off student lending to students attending community colleges, for-profit schools, and other less competitive schools, choosing to concentrate on loans to students attending high profile colleges and universities.

Citibank, SunTrust, and PNC are among the major lenders who have scaled back on student lending. Some financial institutions have canceled lending to students at select schools while suspending this practice elsewhere. Higher default rates at select colleges, lower student participation, and reduced profit margins are some of the reasons why lenders are not supporting certain schools.

Up until recently lending requirements for government-backed student loans (Stafford loans) has been stricter than for private student loans. With some private lenders tightening their lending requirements, the reverse is sometimes true.

Students who need financial assistance are being urged to seek private student loans with other lenders.

Resources

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