Loans Expert

The national economy’s roller coaster ride on Wall Street has not affected Towson students’ abilities to obtain federal loans.

Towson financial aid has been operated through the Direct Loans program of the federal government since 1993, keeping cash flow available through subsidized, unsubsidized and parent loans granted by the U.S. Department of Education, according to director of financial aid Vince Pecora.

The unstable fluctuations of the stock market and the overall health of the economy have led to additional students seeking financial aid.

“We are seeing an increase this year in the number of students that apply and qualify and this goes beyond just having more students on campus,” Pecora said. “We are seeing signs of financial issues with families that may have not had the same issues before. Students and parents are very concerned. They want to know if there is help down the line for them.”

Students participating in The Federal Family Education Loan Program or those that have taken out alternative private loans may be at risk as major lenders Bank of America, Key Bank and M&T Bank have stopped offering student loans, Pecora said. PNC Bank, Discover and Sun Trust Bank have joined the FFELP recently.

The greatest concern for potential borrowers, Pecora said, is becoming credit worthy. Creditors are now holding borrowers to a higher standard, he said, and those that may have been able to secure a loan may not be able to any longer, or not for the same amount.

“We’ve seen that for parents and all home owners it was easier to secure equity lines before than it is now,” Pecora said. “Parents have borrowed against their homes to pay for education and are now finding themselves not eligible.”

In response, the federal government has increased the amount of money students can borrow by $2,000 over the previous limit. Freshman can now borrow up to $5,500, sophomores can borrow up to $6,500 and juniors and seniors can borrow up to $7,500.

The Pell Grant, a federally funded education program, has also been increased from a maximum of $4,310 to $4,731.

According to research from the Project on Student Debt, the average higher education student from institutions in Maryland that took out loans graduates with $16,872 of debt. This accounts for 53 percent of students.

Pecora said that Towson students that borrow graduate with about $16,000 of debt.

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Tags: Student Loans