Question by internet: why have private banks CANCELLED their student loan programs?
Many banks have given up on “private student loans” and are abandoning it on a daily basis.
Private student loans are now seen as “high risk investment” by all major banks and some even claim that it is equivalent to “subprime loans” of 2006 and 2007.
Private student loan for years was an alternative to federal student loan for many whose needs weren’t covered by federal loan limits (such as cost of getting tutoring, gasoline/car expenses and other miscallenous expenses which are for education but not recognized by federal government).
BofA, Citi, JP Morgan, all scrapped their “private student loan” programs. Why?
Even credit unions have given up issuing private student loans for the promising students whose career depends on education. So now these promising students are deprived of a bright future because banks won’t give them the opportunity to prosper?
On 1 hand the economy is recovering per the media, but on the other hands credit is getting harder than ever to obtain from banks? without credit, people cannot make it. Small businesses that depend on access to bank credits for expanding and hiring people, have been shut out of any chance whatsoever. How will things improve then?
For making big ticket purchases such as new house, new car, opening new business, etc etc almost everyone depends upon access to credit from banks. With the help of loan and credit, these things are made possible and that’s how economy recovers and expands. If banks are shutting down on credit or making it tighter and harder than ever to obtain, the economy simply cannot improve ever.
Sadly, credit and loan is only available to the 1% now – who don’t need credit or loan anyway. For the rest of the 99, its NOT ALLOWED. Then why did Obama and Bernanke even bother to bailout the failing banks? this is a serious question.
nowadays even people with good credit score are being denied loan. You would have to have at least a 6 digit personal income just to qualify for loan. Good luck in trying to buy your next “new house” or next new “lexus or bmw”
how painful it must be for many people to realize that they will never get the chance to buy a new lexus or new bmw in the future. they have been deprived of reliable transportation needs
bill gates or mitt romney will get any type of loan or credit from the bank, but you won’t. is that the type of America the founding fathers envisioned, where rich keep getting richer and the rest are barred?
Answer by Maryjane Dark Goddess
Because it’s a high risk loan.
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Question by Jnaujo: Which Banks can I get a Private Student loan from that doesn’t require the school to certify it?
I appealed, yet again, for my Satisfactory Academic Progress Policy, and, yet again, the school has denied it. The reason for denial is due to the fact that I have too many credit hours, and haven’t received my degree yet. The reason for the too many credit hours is, because I transferred from another school 7 years ago, and a bunch of my credits wouldn’t transfer to my degree. I have tapped out every possible out of pocket dollar I had in order to attend last semester. Now, I have maxed out both of my credit cards just to pay for the present semester I’m in. I’m taking 20 credit hours, and working 3 jobs now, because of this STUPID policy. Working these jobs, I won’t even make a quarter of what I would need to pay for my semester. I haven’t even reached my aggregate limit for aid!! I have one more semester left. The school has told me that they WILL NOT CERTIFY any private student loan I get, and they will deny any scholarship I get. I was told that the only way is for me to find a Private lender that will not consider the SAP policy as a requirement to get the loan. Where can I go?
This policy wouldn’t be STUPID, if it actually applied to the STUPID students. As in students who:1) don’t attend class, 2) who drop out of school, and 3) who are failing their classes. I do not meet any of these classifications. I am a straight A student, and have busted my rump everyday of my college career. Now, with 1 semester to go, there is a possibility that I may not be able to finish my degree. Therefore, this policy is STUPID! It’s one thing if a student has 2 years or more to finish, but it’s ridiculous to do this to students who have 1 or 2 semesters left!
Answer by Gypsy
sounds to me like you will have to use credit to obtain a “regular loan”…. maybe with a co-signer… and something as collateral (maybe a home equity loan from your parents?)…
borrow enough to pay for the entire semester and to pay the balances off on those credit cards…. then use the money from your jobs to pay the monthly payments on the loan
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Big banks that offer private-label college loans are facing new competition from credit unions that are looking to issue their own private student loans.
Credit unions, in increasing numbers, are developing partnerships with private student loan companies like Sallie Mae and Credit Union Student Choice to deliver private student loan products to credit union members. In one such agreement, Southeast Corporate Federal Credit Union, which itself has more than 400 member credit unions, will offer private student loans through Sallie Mae.
Private student loans, non-federal education loans issued by banks and private lenders, are designed to assist students who have exhausted their federal student loan options. Private student loans can be used to cover up to 100 percent of a student’s approved educational expenses.
Some credit union private loan programs are being structured to appeal to families with more than one student in college by enabling parents to make multiple withdrawals on a single line of credit worth as much as ,000. In addition, credit union–backed student loans are eliminating loan origination fees and offer both in-school student loan repayment and deferred, post-graduation repayment plans.
In-school repayment options enable students to reduce the overall amount of interest their private student loan accrues before they graduate. According to Sallie Mae, students who begin college loan repayments while still in school can reduce their student loan debt by 30 to 50 percent over traditional student loan payment plans, which defer repayment until after a student has graduated or left school.
The prospects for private student loan companies and student loan securitization are improving marginally. The National Credit Union Administration (NCUA) recently sold a bond worth nearly .2 billion that was backed by student loans, after previously relying on commercial and residential mortgages to secure its bond sales.
Credit rating agencies are less sure that private student loan companies represent a good risk; however, many analysts remain optimistic about the long-term investment potential of private student loans.
Fueling investor confidence in the longer-term prospect of the private student loan market is the growing demand for student financial aid as record numbers of students are entering college each year.
Indeed, private student loans may gain market share in a more immediate future than analysts had been predicting.
On Capitol Hill, the U.S. Senate is currently struggling to pass a continuation of its earlier spending authorization to fund the Department of Education’s federal Pell Grant program, which awards government-issued college grants to financially needy and lower-income students. The current authorization expires December 18.
If the Senate fails to reauthorize the funding proposal at its current level, students who are eligible for a Pell Grant may find their Pell Grant award reduced or eliminated. With less Pell Grant aid available to them, many of these students would then need to take out more money in student loans in order to pay for college and complete their degree.
Congress is already considering elimination of the Pell Grant program altogether, as recommended by President Obama’s National Commission on Fiscal Responsibility and Reform.
The bipartisan panel, which recently forwarded its final report to Congress, recommended that the federal government reduce federal education grants based on a student’s pre-college family income in favor of more government-issued student loans, which would need to be paid back, replenishing the government’s coffers, and that would be more attuned to a borrower’s post-graduation earning potential.
However, spending appropriations for an expanded federal student loan program may face stiff opposition in the Republican-led House of Representatives.
As Congress wrestles with the funding needs and long-term future of both federal grant and federal student loan programs, private student loan companies are positioning themselves to fill in any emerging federal financial aid funding gaps.
Jeff Mictabor is an enthusiast on the topic of student loan issues in the news. He has been writing for the past 10 years for a variety of education publications. He now offers his writing services on a freelance basis.
Question by Brad: Why is the mayor of Philadelphia trying to convince more young people to get caught up in the College Bubble?
Despite the fact that the left’s colleges are currently a massive bubble that is already beginning to burst, leaving the college graduates with worthless degrees and hundreds of thousands of dollars in “student loan” debt that they can’t afford to repay and can’t get rid of by declaring bankruptcy, the liberal mayor of Philadelphia is now trying to convince even more suckers to sell themselves into debt slavery for 4 years of indoctrination in left-wing ideology.
I am convinced that one day, before too long, the suckers currently attending college will release that they have been scammed and will turn on the left. I don’t think they will embrace the right (unless the right has the sense to shut down the government’s “student loan” racket and free the victims from their servitude to the government), but they will certainly be angry at the college racket and at those who tricked them into getting a college degree. I think British-style college riots could be coming to America in the next 5 years if we don’t allow the college graduates to default on the debts that they were tricked into accumulating to attend college. However, I don’t think the riots will be of college students, but rather college graduates.
The government in recent years has been engaging in predatory lending to our nation’s youth to finance a college indoctrination that they cannot afford and which would arguably be a waste of time even if it was free (people get college degrees to work at retail jobs that they could get with a high school diploma and save 4 years of their lives; actually 5 years these days, in most cases).
The federal government is preying on those who are too young to understand what they are doing. They are being encouraged to take these dubious government “loans” that they can’t repay by politicians and by government employees (teachers). Of course, there is also the fact that almost all colleges are owned by the government and even most “private” colleges aren’t really private, since they rely on government subsidies to continue their operations. Not only does the government’s college industry indoctrinate kids in leftist BS (is it really a coincidence that a college degree is called a “B.S.”?), but it charges them exorbitant prices financed through government loans for this dubious service. This is yet another government industry that is actually in genuine need of more regulation (at the very least), just like the government-run “corporations” Fannie Mae and Freddie Mac that caused the housing bubble (which Democrats prevented Congress from properly regulating) and that quasi-private quasi-governmental bank that causes inflation and the business cycle (the Federal Reserve).
Answer by thecharleslloyd
There is a lot of money to be made out of colleges.
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Question by Aarzoo Bhatia: from where can i get information on making a project on–“role of banks in giving a home loan”?
i am a student of classx.
Answer by yyyyzz (wise)
You should have written that before the world economic meltdown. You won’t get a home loan from a bank currently – even at gun point. The are sh*t scared. They were the reason for the current economic crises.
What do you think? Answer below!