Much has been made in the news lately about the current situation with student lending. Some members of the U.S. Congress are insisting that there is a crisis unfolding as the number of lenders available to offer private student lending dwindles. Although there is some reason for concern, most students will not have a problem securing loans whether they are federal Stafford loans or private student loans through a lending institution.

One group of students has always had a difficult time securing funding and that group consists of students with bad credit or no credit history at all. The current “crisis” as some are calling it is due to lenders tightening up their lending requirements, standards that they relaxed when the economy was strong.

Loose lending practices get everyone into trouble: the student who is unable to pay back his debt and the lender who has to write off bad loans.

Although there isn’t a “magic bullet” for solving any of life’s challenges, students who desire to go to college and are in need of funding still have options available to them. Namely, if your credit isn’t good or you have no credit at all, seeking a co-signer for your private student loan is something you may want to pursue.

Granted, you need to depend on the generousity of your parents, a close relative, or a trusted friend, but if they know you and believe that you will repay your debt, then a willing co-signer can spell all the difference for you.

When applying for a private student loan, please note that your credit reports will be obtained by the lender as will your co-signer’s reports. Your credit history and credit score will be considered, but your co-signer’s good credit could tip the balance in your favor. You quite possibly could be approved for a loan, but you may be able to secure a lower interest rate, saving you thousands of dollars on your loans.

Further Reading

House Panel OKs Higher Limits For Student Loans

Lenders Drop Out Of Student Loan Market

Resources

How Best To Qualify For Private Student Loans

Private Student Loans

Tags: college aid, college loans, government loans, private student loans, Scholarships, stafford loans, Student Loans

The housing crunch, brought about in part due to problems with sub-prime mortgages, is now impacting student lending. Lenders are warning that tighter credit is here, making it much more difficult for some students to secure the funding that they will need to attend school this fall.

As a result, students who are receiving their financial-aid award letters now, are being urged to apply for their student loans immediately as lenders are predicting that further credit tightening and a loss of funding could close out this option for some students.

Nervous Investors Flee Student Loans

According to the article, Lenders Predict Harsher Climate for Student Loans, which was published in the WallStreet Journal last month, credit is being tightened up across the board. The crisis with sub-prime mortgages has investors spooked, which is bad news for asset-based securities, an important source of funding for student loans.

Most student loans, three-quarters in fact, are guaranteed by the federal government. States also fund student loans and some, including Michigan, are having a difficult time raising the capital needed to back these loans. In cases where they have succeeded, credit restrictions on borrowers are tighter and interest rates are higher.

Students Turn to Private Student Loans

Private student loans remain an option for some, provided that the student’s credit history is strong. Most students have their parents co-sign the loan, which can lower their interest rate, particularly if their parents’ credit is very good.

Due to the uncertainty of the market, lenders are urging students to not put off applying for loans as funding could dry up and rates are likely to increase. If you have received your financial-aid letter, then securing financing now can help you avoid even tighter market later.

Further Reading

College Loans See Subprime Fall Out

Credit Crisis May Make College Loans More Costly

Resources

Financial Aid Charts

Money For College Options

Tags: college loans, Education Student Loan Authority, financial aid, private student loans, Sallie Mae, student lending, Student Loans