According to University of Mary Hardin-Baylor associate vice president and director of financial aid Ron Brown, major private lenders offering loans to students at the college have dropped by about 40 percent, down from 60 last school year to 37 currently.
“I have not seen a huge outcry from students yet,” Brown said. “But things could change.”
He has concerns for students looking for privatized loans, and possibly government-based financial aid in the future.
“I think the credit checks are going to be more ridged,” said Brown, who said often parents are required as co-signers on loans.
“It think it could be very possible that lenders who may have loaned in the past will not, based on credit information, which could show certain risks (based on credit checks and repayment) they were willing to take, but now will not take,” he said.
Things are also looking bleak for students in the form of Pell grants and other government based aid and loans. Earlier this year, Congress appropriated an extra $2.5 billion in funding for the Pell Grant Program. However, according various reports, there is a $6 billion Pell shortfall due to increased college enrollment combined with increases in eligible recipients due to current economic conditions.
Pell grants are awarded based on a financial need formula determined by Congress using information submitted in the Free Application for Federal Student Aid students fill out on a yearly basis.
This year the maximum amount of money a student can be awarded through a Pell grant is $4,731. The average cost of undergraduate tuition at UMHB is $12,010 per semester or $24,020 per year for a typical resident undergraduate. According to the UMHB Web site, this cost is based on 14 semester hours of tuition, room and board, and other fees.
“We’re going to see increased traffic (in the financial aid office) because we’re expecting some students to have the loans they were given in the past not rewarded,” Brown said. “We’re trying to advise students for the 2009-10 year that they need to come into the office to let us know if they’re planning on having any hardships, or income changes that may impact their need status.”
To help alleviate financial problems, UMHB is offering more scholarships, Brown said, although the college has not announced a dollar amount.
Students also have options in the form of unsubsidized Stafford loans that are funded federally and don’t require students to demonstrate financial need. Interest rates for Stafford loans are generally lower than private loans but often have lower limits for borrowing. Unlike with unsubsidized loans, the government pays interest while the student is in school.
Brown said he does not expect the college to raise tuition costs by a substantial amount for the 2009-10 year. Currently, state averages have seen tuition rise at public universities by 10 to 12 percent per year over the last few years.
“From what I’ve been told, we’re going to try to limit our increase to half that amount,” said Brown about a possible tuition hike.
Students at UMHB were mixed on the funding issues.
“I’m not too worried about it,” said Jessica Newman, 20, who said she receives a mixture of financial aid and family money to pay for school. “Right now I would guess that 90 percent of my tuition is paid for through money my parents saved up when I was younger - the loans I receive are very small.”
Ron Johnson, 22, who took out loans through a smaller, private lender, said his past private loans were purchased by Chase this summer.
“I’m a little worried about what’s going to happen next year when I’m applying with a new (lender),” he said.
At Temple College, financial aid director Fred Pena said students have been coming in to ask questions about lending because of the economic conditions.
“There have been a few worried students because of the economy,” Pena said.
Students are told to look at various options, he said.
“We encourage them to look at Pell grants, which has seen an increase in funding and is expected to continue to grow,” Pena said. “We’re also encouraging them to apply for scholarships - the best thing a student can do right now is educate themselves about the options that are out there.”
Temple College has been able to attract more students because costs have remained steady at the school, he said. Full-time students taking classes at TC pay about $980 for 14 credit hours if they live within the TC district or $1,540 if they live outside it.
“Our costs are much lower than four-year colleges and private universities,” Pena said. “I think during times like this, that appeals to people. Community colleges and junior colleges are very attractive.”
Nationally, the average debt of students graduating with loans in 2007 jumped to $20,098, up from $18,976 in 2006, according to The Project on Student Debt, a California-based advocacy group.
