Wednesday, June 4, 2008

National Banking Crisis Results in Less Support for Community and For-Profit Colleges

It appears that that the ever-present banking crisis is adversely affecting the ability of students to attend two-year community colleges and for-profit colleges.  According to this story in the June 2, 2008, issue of the New York Times, "[s]ome of the nation’s biggest banks have closed their doors to students at community colleges, for-profit universities and other less competitive institutions, even as they continue to extend federally backed loans to students at the nation’s top universities."  Here is an excerpt from the article:

The practice suggests that if the credit crisis and the ensuing turmoil in the student loan business persist, some of the nation’s neediest students will be hurt the most. The difficulty borrowing may deter them from attending school or prompt them to take a semester off. When they get student loans, they will wind up with less attractive terms and may run a greater risk of default if they have to switch lenders in the middle of their college years.

Tuition and loan amounts can be quite small at community colleges. But these institutions, which are a stepping stone to other educational programs or to better jobs, often draw students from the lower rungs of the economic ladder. More than 6.2 million of the nation’s 14.8 million undergraduates — over 40 percent — attend community colleges. According to the most recent data from the College Board, about a third of their graduates took out loans, a majority of them federally guaranteed.

“If we put too many hurdles in their way to get a loan, they’ll take a third job or use a credit card,” said Jacqueline K. Bradley, assistant dean for financial aid at Mendocino College in California. “That almost guarantees that they won’t be as successful in their college career.”

For the entire article, "Student Loans Start to Bypass 2-Year Colleges" see the June 2, 2008, issue of the New York Times.

DAB

http://lawprofessors.typepad.com/nonprofit/2008/06/national-bankin.html

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