Student Loan Crunch Affected Some Private Schools, But Crisis Largely Avoided
The student loan crunch that began this past spring failed to become
the widespread crisis that experts predicted, according to the
results of a survey by the National Association of Independent
Colleges and Universities. Still, the NAICU reports, some of the
private colleges surveyed have had to scramble to help their
students get the loans they need to pay for school (“Student-Loan
Crunch Sets Back Some Private Colleges, but Most Manage,” The
Chronicle of Higher Education, Oct. 22, 2008).
More than 500 NAICU member institutions responded to the survey,
including 450 private colleges and universities that participate in
the Federal Family Education Loan Program, the federal student loan
program that relies on private, third-party lenders to provide the
majority of federally backed loans to students. Of those schools, 85
percent found that their students were dropped by at least one
private lender, and 27 percent of the schools said that their
students had struggled to find a replacement lender.
Schools reported that their students who weren’t able to get a
private student loan often had to take time off from school, drop
down to part-time status, work additional hours, or use a credit
card to make up the difference in their college expenses.
Three-quarters of the colleges surveyed saw an increase in demand
for student aid, but 67 percent reported no negative impact on their
enrollment. This is “a good sign,” said David Warren, president of
NAICU, even though he speculates that many families may had not yet
felt the full impact of the downturn when they were surveyed on
Sept. 10., only days prior to the Lehman Brothers bankruptcy filing.
“On the one hand, we avoided anything we’d call a crisis,” Warren
said. On the other, we see some clear signals of what may be in
store for families right on the edge.”
Only 18 percent of respondents said they had fewer returning
students than anticipated, while 19 percent reported having a
smaller freshmen class than expected, which came as a surprise to
Sarah Flanagan, NAICU’s vice president for government relations and
policy. “I thought our sector was going to be OK.”