Colleges aid students as lenders flee

The federal government may be busy bailing out Wall Street tycoons, but colleges are also throwing out a life raft to the students drowning in tuition bills.
While colleges try to cut back operational costs to increase financial aid, cash-short private lenders are cutting back on loans to students. A National Association of Independent Colleges and Universities survey of 504 private institutions found that students at nearly half the schools were unable to get a necessary private loan because of stricter loan qualifications, NAICU spokesman Tony Pals said.
The September survey, published last week, also found that a small percentage of students were unable to secure sufficient loans and were forced to take a leave of absence or drop out of school, Pals said.
‘We were genuinely surprised by the number of institutions that reported students having been affected,’ he said.
The efforts by colleges to meet financial need have cushioned the blow for students, Pals said, and nearly one third of colleges in the study reported increased grant aid for students facing difficulties. Most schools studied will implement innovative affordability initiatives by next semester, he said, including freezing new hires, cutting operational budgets and postponing renovation projects.
President Robert Brown announced Sept. 30 that BU would take the cautionary steps of freezing some new hires and holding off on nonvital construction.
The NAICU website lists new student aid initiatives, and credits Boston University for ‘replacing need-based loans with grants for Boston residents who graduate from Boston public schools and are admitted to the university.’
BU is trying to reassure students by holding a financial aid and student loan forum Nov. 4 and encouraging students to contact a number of staff offices for additional assistance.
‘We may not be able to predict when the economic turmoil will calm down, but we will do our best to ensure you have the information you need,’ BU Dean of Students Kenneth Elmore wrote in an email to students Tuesday afternoon.
‘To my knowledge, we didn’t experience any issues this year that were not typical,’ BU spokesman Colin Riley said.
Riley said the university is waiting to see how affected students are by the economic crisis. The NAICU aid initiative was planned before and is not connected to the recent student loan market turmoil, he added.
Consumer Bankers Association spokesman Harrison Wadsworth said there are fewer lenders as a result of the weakened credit economy. Those lenders still providing loans have less money available and are consequently avoiding risky loans that may not be repaid.
‘It is more essential than ever before that a student have a cosigner with good credit,’ he said.
Wadsworth said there should be at least enough capital to fund loans for the remainder of the academic school year, but expressed concern at the prospects for approval next year.
‘I’m worried about next fall,’ he said. ‘Hopefully, some large measures will be taken to ease the credit crisis before we get to that point.’