As banks and lending agencies struggle with the credit crisis, some have quit offering student loans or cut back on the schools they serve. Most affected are two-year colleges, such as Mendocino College in Ukiah, where financial aid employees spent the summer repackaging loans for nearly 60 students after two lending agencies announced they were no longer interested in working with the school.
"We really scrambled," said Jacque Bradley, the college's assistant dean for financial aid."Some lenders won't work with community colleges because we won't have enough volume. They would rather put their money in a big university. You have a higher volume, and you have the same deadlines and dates," she said. Nationally, more than 130 lenders have quit the student loan market, including some who opted out in late summer, according to FinAid.org, an Internet guide to financial aid programs.
Santa Rosa Junior College freshman Kaela Colvin knew she would have to dig a little to find a reasonable college loan package to help pay for spring semester abroad, but she didn't expect the pickings to be quite so slim." I'm noticing that more people are afraid of (students) because they think they won't pay it back," she said. "Banks look at it like an immaturity thing." Colvin's waiting to hear whether her loan application to finance a semester in Italy will be approved. She's quick to note she pays her credit card, cell phone, car note and insurance bills on time, and she hopes a lending agency will see her as a good financial risk.
At SRJC, nearly half of the 10 agencies on its preferred-lenders list won't work with its students this semester, said Kristin Shear, director of student financial services. The list highlights lenders that have established relationships with the college. While students are free to choose any lender, colleges like to maintain lender lists that include companies familiar with their schools, its deadlines and its policies.
"We are a small, rural college. We do less than 150 loans," said Mendocino College's Bradley. "I want to know that (lenders) are going to take care of the students for the long haul." Citibank, a major national lender, announced in April it would "suspend lending at certain schools," including SRJC and Empire College in Santa Rosa. "We evaluated market segments of schools where loans with lower balances and shorter interest-bearing periods resulted in unsatisfactory financial results," Citibank spokesman Mark Rodgers said in a statement last week. "We hope to resume lending at these schools as economic conditions for student lending improve."
Some contend the shift affects students least able to attend school without financial help. But even with some players pulling out, SRJC's Shear hasn't heard of a student who can't find a lender." We have a good-sized loan program for a community college," she said. "We do $2 million to $2.5 million in loan volume with 400 to 500 student borrowers.” Wells Fargo and other big lenders continue to work with the school. "Our loan program is alive and well," she said.
Empire College, where tuition is substantially higher than community college fees, had two preferred lenders drop off its list: Citibank and Chase. Plenty of potential lenders remain -- those eager to establish banking relationships with students who in due time will likely make money, rather than borrow it, according to Empire President Roy Hurd.
"We immediately canvassed the market, talked to lenders and found those lenders who were amenable to making those student loans," he said. "Any student who wants a student loan is going to be able to find one -- at least at this point."
Source:http://www.pressdemocrat.com
