How Will A Down Economy Affect Your Community College Plans

By Bryce Q. Jarwoski

Obtaining a student loan for students at community colleges may have just become harder. In the current financial climate, the biggest banks in the country have reduced the colleges on their eligibility listings for student loans. Unfortunately, most of those removed are community colleges. It would appear that students attending the more expensive and elite colleges will still be able to get a student loan, but those attending community colleges will not. College education is being split into levels by this policy.

The real reason behind the decision by leading banks to stop offering student loans is the current financial crisis. It is simply much harder for lending institutions to raise the money themselves, so they do not have the funds to lend and they have had to cut back.

On a brighter note, there are other lenders who claim they will continue to offer loans to all college students. Companies such as Nelnet and Sallie Mae have recently committed to continuing with the Federal government backed scheme and will lend to students attending any college. This is good news for those attending community colleges.

For students looking at different types of student loans, the best option is the federal scheme. These are low interest loans that offer interest fixed and paid for by the government for the duration of your course. These federal loans are available to all college students, attending any college, from any background, with any credit history.

But there are students at community colleges that cannot access these cheap loans. Why? Because some of the community colleges do not support the federal scheme and this means their students cannot get the loan. These students have to make other arrangements to pay for their college tuition and expenses, and are often left with no other option but expensive private loans or credit cards.

The banks claim that these students are a higher risk category and more likely to default. Students at community colleges often come from low income families and should be entitled to cheaper federal loans. The colleges would be better supporting the scheme and teaching the students how to manage their finances and repayments.

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