The New York Times reported today that some of the country’s largest banks, including Citibank and JPMorgan Chase, are extending fewer loans to students at two-year colleges and for-profit institutions (though not at top universities):
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.
As the Class of 2008 prepares for their next move after graduation, to what extent is this phenomenon limiting their choices? Have you — or your students, or your children — found it increasingly difficult to get loans this year? Has it caused you, or them, to put college on the back burner?
image at here_for_now’s site at flickr.com/creativecommons