Loans Expert

College students are feeling the effect of the credit crunch as some private companies stop issuing student loans and others raise interest rates.

The financial aid office at the University of Maryland is busy even before classes begin. Many students returning to campus are counting on financial aid to pay for tuition, books and supplies.

“I think in today’s day and age, student loans are very important,” said student Abhas Mathur. “There aren’t too many jobs out here that cover a full student’s expense for a college education, so student loans bridge the gap.”

“It’s pretty important to me. I wouldn’t be able to afford to go here without it,” said student Laura Wickizer.

But new student loan regulations and a tight economy can make it more difficult to find affordable student loans.

Paul Hassler is putting the youngest of his four daughters through college. Each year, he consolidates the outstanding student loans to make one interest payment, but this year, he was told he couldn’t consolidate, and the new loan carried a higher interest rate.

“The cost of the loans was running me about $550 a month, but by not being able to consolidate would have moved the cost of the loan up to almost $1,100, $1,200,” he said. “For our budget, it really just would have blown things out of kilter with us.”

The University of Maryland’s Financial Aid Director Sarah Bauder said the rules have changed. She said consolidation is no longer an attractive option, and she does not recommend it anymore.

“When student loans went from a variable interest rate to a fixed interest rate, that really kind of changed the landscape of consolidation,” she said.

Hassler rolled the student loans from private lenders into direct loans funded by the federal government rather than deal with $1,200 monthly payments. Drive Less, Save Money On Auto Insurance.
“It went to about $640, $650, including all of the loans from this past year,” he said.

Bauder said there is plenty of information online about student loans, and it can be accessed without cost. Students can also get help at their school’s financial aid office.

Related posts:

• Credit Crisis Crunching Some Student Loans
• Ease the burden of student loans by consolidating
• Student-Loan Consolidation Choices Shrink
• Fed to help secure student loans
• Student loan consolidation rate

Tags: Student Loans