Student Loan Blog : JPMorgan Chase, financial aid

Harvard Inks Custom Loan Deal to Help International Graduate Students

Student Loan Girl — Tue, 03 Mar 2009 23:47:00 GMT

At a time when large numbers of lenders exiting the student loan marketplace has made it more difficult for international students to find college and graduate school funding, Harvard has announced an exclusive agreement with JPMorgan Chase that will allow the school’s international graduate students to borrow up to the full cost of attendance without a co-signer, reports The Harvard Crimson (“Harvard Strikes Loan Deal,” March 2, 2009).

Considered the first deal of its kind for the banking giant, the new private loan agreement may make it easier for international students — who are ineligible for U.S. federal financial aid — to get the money they need for school.

The JPMorgan deal was arranged after Citibank announced it would no longer offer loans to Harvard’s international graduate students in October of last year, citing the frozen credit markets and higher loan default rates among international students compared to their American counterparts.

Citibank also cancelled similar arrangements with MIT and the University of Michigan, The Harvard Crimson reports.

Harvard’s arrangement with JPMorgan is part of the school’s pledge to maintain its current levels of graduate student aid for the next school year even at the expense of other programs, says Harvard President Drew Faust — a commitment she deems one of the university’s top priorities.

The university has also unveiled several expanded financial aid programs, including those for Harvard Law School and Harvard Medical School, as part of its renewed commitment to meeting student need.

Share this post: email this | del.icio.us | reddit

Proposed Legislation Would Prevent Student Loan Lenders from ‘Cherry-Picking’ Schools They Lend To

Student Loan Girl — Fri, 20 Jun 2008 01:14:00 GMT

To ensure all students have access to student loans regardless of what type of school they attend, two Democratic senators introduced legislation Tuesday that would prohibit banks and other lenders from “picking and choosing” which institutions of higher education they do business with, according to a New York Times article (“Bill Promotes Universal College Loans,” June 18, 2008).

Under the proposal, lenders that participate in the Federal Family Education Loan Program would have to extend credit to any eligible student, regardless of a student’s income or the type of institution they attend, as long as the student’s college is a member of the FFEL program, writes Times reporter Jonathan Glater.

Senators Patty Murray, D-Wash., and Christopher Dodd, D-Conn., introduced the legislation in response to the decision of Citibank, JPMorgan Chase, PNC, and SunTrust to stop offering student loans to community colleges and other two-year institutions.

“Lenders offering loans backed by taxpayer dollars shouldn’t be able to discriminate against certain schools or students,” Murray said in a statement. “Denying loans based on school, program length, or income level locks the door for far too many.”

Bill Faces an Uncertain Future

Banks who have ceased lending to certain two-year institutions contend that they lose money on the loans. Schools that have been cut off by the banks tend to have higher default rates and fewer borrowers with small loan amounts — financial factors that, lenders say, make business at these schools less profitable.

But financial aid administrators counter that lenders should not be allowed to “cherry-pick,” because selective lending could make it harder for low-income students to pay for college.

The proposal, which is under review by the U.S. Department of Education, has already been met with controversy. Some financial aid officials support the measure as way of ensuring access to student loans, while others believe it might have the unintended consequence of pushing lenders out of the federal student-loan business altogether at time when over 100 lenders have already left the FFEL program.

While the bill’s prospects are unclear, Sen. Edward Kennedy, D-Mass., chairman of the Senate Committee on Health, Education, Labor, and Pensions, is expected to co-sponsor the bill.

Share this post: email this | del.icio.us | reddit

Student Loan Snapshot: Who Wins, Who Loses?

Student Loan Girl — Fri, 06 Jun 2008 23:02:00 GMT

College administrators, students, and parents have expressed concern over the last few months that students may not be able to readily get the funds they need for college this fall in light of the $21 billion cut in government subsidies to federal lenders and the effects of the sub-prime mortgage crisis causing over 103 lenders to leave the Federal Family Education Loan Program.

In response to these concerns, Congress passed the Ensuring Continued Access to Student Loans Act last month to help stem the exit of lenders from the FFEL program and increase access to student loans.

While the extent of the act’s effectiveness in increasing the availability of student loans remains to be seen, many students may have a more difficult time getting the money they need for school this fall according to an article in The Washington Post (“Loan Programs Will Leave Some Students Behind,” May 25, 2008).

Community college students and those students attending other two-year institutions, may face the most challenges getting student loans now that some of the largest student loan lenders like JPMorgan Chase and Citibank no longer offer loans to these types of schools.

Independent students with low or moderate credit scores and no co-signer will have a harder time securing private student loans, as lenders now enforce more stringent credit requirements and demand credit scores of 650 or higher to qualify.

Dependent students, especially those returning to school, that have decent credit will likely be able to find enough federal financial aid. Chances are, though, they’ll pay higher fees than the previous year and may have to find new lenders to replace those that have withdrawn from the FFEL program.

Parent borrowers with minor financial delinquencies will still be able to qualify for credit- based PLUS loans. However, those with "adverse credit histories," or those who have a foreclosure or bankruptcy on their credit history, may have to wait up to five years before they can borrow again.

Share this post: email this | del.icio.us | reddit

Banks Become More Selective, Leaving Some Colleges Without Student Loans

Student Loan Girl — Tue, 03 Jun 2008 00:49:00 GMT

Students at community colleges, for-profit universities, and other less competitive institutions may have trouble finding a lender willing to offer them federal student loans as some of the nation’s biggest banks pare down the list of schools they serve, according to an article that appeared today in The New York Times (“Student Loans Start to Bypass 2-Year Colleges,” June 2, 2008).

Citibank, JPMorgan Chase, PNC, and SunTrust are no longer offering student loans to certain colleges — schools that the banks have determined tend toward higher default rates, fewer borrowers, and small loan amounts that make business less profitable.

More than 6.2 million — over 40 percent — of the nation’s undergraduates attend community colleges. These students, according to the College Board, borrow an average of $3,200 a year.

In late May, Citibank, one of the nation’s largest providers of student loans, announced its student lending division, the Student Loan Corporation, would temporarily suspend lending to schools whose borrowers tend to have college loans with “lower balances and shorter periods over which we earn interest.” Citibank also announced it would cease lending to schools it anticipated to have minimal loan volume.

“The logic is so flawed, that for us to have volume with them in the future, we have to have had volume with them in the past,” said Korey Compaan, financial aid director at William Jessup University in Rocklin, Calif. To deny federal student loans to students based simply on the college they attend, he said, is “totally and completely unethical.”

Sallie Mae and Nelnet have recently reaffirmed their commitment to offering federal college loans regardless of the institution a student attends. And Wells Fargo has contacted financial aid administrators at schools dropped by Citibank to express a willingness to lend to their students.

Share this post: email this | del.icio.us | reddit