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How the Credit Crisis Will Affect Student Loans

News Flash: Credit Crisis Seeps into Student Loans

Lining up student loans may be a much tougher scene this Spring than it has been in past years. Many types of student loans were funded by lenders issuing securities backed by these loans. Now investors are shying away from this type of investment because of the negative way many mortgage-backed securities turned out. In this way, the credit crunch that began with mortgages is now affecting student loans. Because this was the main source of funding for private student loans, and especially for smaller companies, many loan providers will likely boost interest rates on private loans up to one percentage point, not accept borrowers with a credit score under 650, and insist that parents co-sign for their kids.


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sweetpeabrina sweetpeabrina 9 years
Interest rates are going up by up to 1%?! I'm already paying out the wazoo in interest! :rant: They are making it impossible to pay back! I need to win the friggin lottery.
sophia_HL sophia_HL 9 years
Good thing I already wracked up a lifetime worth of dept getting my edumacation.
Megatron Megatron 9 years
I am one of those stuck in this situation. My school's aid given (I go to CSUMB, raieven) was not affected, but the loans I had to take out to afford what my school did not offer first offered me loans but with outrageous interest rates and then I FINALLY got acceptable rates when I co-signed with my THIRD choice, my step-father. That process seriously took all of Winter Break.
chakra_healer chakra_healer 9 years
This is ridiculous, getting a higher education has never been more expensive and now companies want to make it more difficult for students to gain access to much needed extra funding. Ugh. I do like to read that sallie mae is having issues, tho. :) Their move to privatized was supposed to prevent these sorts of problems and make collection of delinquent accounts more efficient. Guess not. :D
chakra_healer chakra_healer 9 years
This is purrely for private loans. Federal loans are not beased on credit worthiness, so SFSU's aid programs (grants, fed loans, scholarships) will not be affected.
raieven raieven 9 years
So will this effect state schools? like um, SFSU?
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