In the past month, the media has been jam-packed with stories about a supposed student loan credit crunch. It's true that, as a result of the general turmoil in the credit market, some lenders have decided to stop offering both federal and private, unsubsidized student loans. The requirements have also been tightened for those borrowing private loans.
But the experts I've talked to say there's no crisis. In fact, there may be a silver lining to the credit upheaval: a saner market that steers more students and families toward safer, cheaper, smaller, federally guaranteed loans.
"Every year, nearly 400,000 academically qualified high school graduates do not pursue a four-year education. For many of those students, cost—or fear of cost—is the main deterrent. We know some of these students, particularly those from low-income families, may be debt-averse, unwilling to take on even reasonable levels of student borrowing. In light of the real challenge we face persuading students to responsibly invest in their education, we believe any discussion of a potential credit crisis should conducted with great circumspection and care. We believe that the student loan industry and its surrogates have sought to play up the risk of a crisis in the media in hopes of reversing the cuts to their excess subsidies enacted by you just last year. While those familiar with the industry recognize the perennial game of chicken it has played with Congress over subsidies, these interest groups are sending an insidious and dangerous message to students and families around the country about access to college. "