17% Swell in College Financial Aid Submissions Hints at Economy's Effect on Families - meltdown
This year, more and more families are calling on the federal government to help pay for college fees as parents face a shrinking job market.High food and gas prices, as well as tighter lending restrictions during the current credit crisis.According to a recent U. S. report, the number of submissions for federal student funding free applications (FAFSA) increased by 17% this yearS.
Ministry of Education.
The Education Department has never received so many FAFSA submissions, with a total of 9 million in the the2008-09 school year --1.An increase of 3 million over last year, although only 300 new students are expected to enter the higher education system this fall.Financial aid experts say students who traditionally rely on federal student loans to pay for college fees are joining in, along with more than a million students whose families were previously able to pay for their own fees, but there is no need for federal financial support.
"What we see is more people filling out requests for financial assistance," said Richard tumei, the relevant deputy provost at Santa Clara University."Students who didn't need help before came in."With the impact of the economy on student lending institutions, schools will usually turn to the federal government in the months before the start of school, and student lending providers will be subject to the purchase of federal and private loans by potential borrowersEspecially this year, with the economy down and unemployment at its highest level in five years, lenders are expected to handle more debt.
Average number of applications for student loans for more and more families in need of financial assistancexa0-That is, if investors are not affected by the recession itself.In the ongoing credit crunch, someFederal creditPrivate student loans are forced to suspend their private student loan program.University loans provided by lenders are not that good either.
Last fall, Congress passed federal legislation to cut federal subsidies by more than $21 billion in Federal Family Education Loans, bringing the governmentSupport parents and student loans obtained through these third timesThe borrower of PartyFFELP is basically unprofitable.To add to the sudden loss of government subsidies for these lenders is a common problem in the student loan credit market.Aftershocks of the subprime crisis.Many of thenon-Bank FFELP lenders obtain the funds they need by packaging and selling their student loan portfolio in the secondary market to create new federal university loans.
But investors are still upset after the subprime mortgage and alt collapseIn the face of rising foreclosure rates in the housing sector, the credit market and vigilance against any default have stopped buying a package of student loans.Without a buyer of the federal student loan portfolio, FFELP lenders cannot generate the liquidity needed to fund any new federal parent or student loan.Even after the government has passed the emergency legislation in the act on ensuring continued access to student loans, the Ministry of Education can purchase the federal student loan portfolio from FFELP lenders, as providing capital to these lenders, they need a new student loan, FFELPlenders, which simply cannot come up with the money they need to fund the initial portfolio they can sell to the government.
Cash-At present, more than 100 FFELP lenders have suspended their federal student loan program, leading to thousands of students and parents looking for new lenders for their federal university loans.Due to concerns that the FFEL project is becoming more and more unstable, so far this year, nearly 300 universities have applied to join more than 4,600 schools for the direct loan program of the Ministry of Education, students receive their federal parents and university students directly from the government rather than through a third institutionParty.In a recent survey conducted by the student loan analysis company, 40 percent's University administrators said they were also considering moving from the FFELprogram program to the direct loan program.
Many families that rely on private student loans to supplement federal grants are harder to get private student loans, and university loans are also looking for new lenders as non-Federal private bank loans face the same liquidity crisis as FFELP lenders.Private loan providers who have not yet suspended private student loan payments have been forced to tighten credit requirements in response to investor concerns.According to these stricter credit standards, most college students usually have little or no credible theory in place and may not be able to qualify for private student loans without a co-lendingsigner.
With the increase in foreclosures and the difficulty for families to pay bills, the parents or other families of the students may not be eligible to become commonsignerseither.And last year, students or colleaguesA signer with a credit score of 620 may have reached a minimum credit-For the score requirements for private student loans, many lenders currently accept only 700 points or higher.According to Experian, the national average credit score was 694.
Stricter credit standards and growing scarcity of private loan lenders have had a huge impact on the number of students who can rely on private student loans to help them pay for college tuition this semester --Especially those low.Income students may need the most financial aid, but with more stringent credit and income requirements, they are least likely to qualify.In community colleges and vocational collegesFor example, training schools with lower tuition fees are particularly attractive for low tuition feesandmiddle-According to Harris Miller, president of the Association of vocational colleges, only 25 to 35% of students in income families have been approved for private student loans this year, compared, the number of qualified people last year was 75 to 80 percent.