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Loan companies forced to freeze funds, downsize
Due to recent economic collapse, lenders cut back to stay afloat
Issue date: 2/12/09
The continuing global credit crunch has forced major student-lenders to cut back, with 39 private student loan companies announcing immediate suspensions of student loans, according to Mark Kantrowitz, publisher of the financial aid guide finaid.org.
According to the guide, a total of 177 lenders have suspended either federal or private loan programs.
The Hopkins Office of Financial Aid claims that it is not affected by the current loan market.
"Our only area of potential exposure is in the private/alternative loan market," Director of Student Financial Services Vincent Amoroso said.
"Since these loans are fully funded by lenders, there has been an impact at the national level in availability. However, that has not been the case at Hopkins. Given our academic reputation, high graduation rates and potential earnings for our graduates, lenders are still providing loans to our students," he said.
Amoroso said that Hopkins students were still able to obtain private loans, despite the conditions.
"I don't want to imply this couldn't change in the future, but I do think we would be one of the last schools in the country to see this source of money dry up," he said.
While the credit crunch has not affected federal programs like Pell Grants and Stafford loans, the shrinking student loan market has many worried.
"The private lending industry has become paralyzed," Senior Vice President Johanna Liadis of National Education, one of the many student lender corporations suffering from the economic crisis, said.
"No one wants to go out of business and stop lending. However, some lenders have overstretched and have to close the doors," she said.
Although many of the lending institutions still express a desire to offer private student loans, several institutions, such as Bank of America and Wachovia, have suspended their student loan programs.
Other major lender corporations, including TCF Bank, M&T Bank and HSBC Bank, have ceased their participation in the Federal Family Education Loan Program (FFELP).
According to the guide, a total of 177 lenders have suspended either federal or private loan programs.
The Hopkins Office of Financial Aid claims that it is not affected by the current loan market.
"Our only area of potential exposure is in the private/alternative loan market," Director of Student Financial Services Vincent Amoroso said.
"Since these loans are fully funded by lenders, there has been an impact at the national level in availability. However, that has not been the case at Hopkins. Given our academic reputation, high graduation rates and potential earnings for our graduates, lenders are still providing loans to our students," he said.
Amoroso said that Hopkins students were still able to obtain private loans, despite the conditions.
"I don't want to imply this couldn't change in the future, but I do think we would be one of the last schools in the country to see this source of money dry up," he said.
While the credit crunch has not affected federal programs like Pell Grants and Stafford loans, the shrinking student loan market has many worried.
"The private lending industry has become paralyzed," Senior Vice President Johanna Liadis of National Education, one of the many student lender corporations suffering from the economic crisis, said.
"No one wants to go out of business and stop lending. However, some lenders have overstretched and have to close the doors," she said.
Although many of the lending institutions still express a desire to offer private student loans, several institutions, such as Bank of America and Wachovia, have suspended their student loan programs.
Other major lender corporations, including TCF Bank, M&T Bank and HSBC Bank, have ceased their participation in the Federal Family Education Loan Program (FFELP).
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collegeloanconsultant
posted 2/13/09 @ 8:29 AM EST
While traditional lending institutions are not participating in private loans, there are a number of alternative lending models that have begun to take hold, filling the void. (Continued…)
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