College Steps in After Edamerica Falls Behind in Dispersing Student Loans

Student Loan Girl — Tue, 30 Sep 2008 16:03:00 GMT

A Milwaukee technical college is providing emergency student loans to some of its students after one of the college’s student loan providers announced it would not immediately have funds to issue the loans, reports the Milwaukee Journal Sentinel (“MATC Offers Emergency Loans After Edamerica Delays Payments,” Sept. 23, 2008).

To assist students, Milwaukee Area Technical College decided last week that it would tap into its general fund to provide more than $250,000 in emergency student loans to 108 of its students who had taken out their college loans with Edamerica, the eighth-largest student loan provider in the country.

Edamerica was on the suggested lender list at both MATC and the University of Wisconsin-Milwaukee but was removed from the lists when the schools learned Edamerica had also fallen behind in dispersing loans to students at other schools, including the University of Maryland-Baltimore County and the University of Southern Mississippi.

Some of the technical college’s affected students were also scheduled to receive loan refund checks — the remaining portion of a borrower’s student loan award after tuition costs have been met — ranging from $10 to $4,000.

Students who are eligible to receive the emergency tuition loans and the refund checks — largely used by students to pay for living expenses like housing, food, and transportation — are required to sign a new master promissory note with the school. These students will be expected to repay MATC for the loan if Edamerica does not reimburse the college.

An Edamerica executive who spoke to the Baltimore Sun in August blamed the credit crunch and the economy for the financial problems that have plagued Edamerica and other student loan providers in the federally guaranteed student loan program. According to FinAid.org, a total of 137 of these lenders have exited or suspended their participation in all or part of the Federal Family Education Loan Program, which is made up of private third-party student loan providers.

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Student Loan Debt Is on the Rise, and College Grads Face Growing Financial Obstacles

Student Loan Girl — Sun, 04 Nov 2007 20:10:00 GMT

Money. Some of us have it. Some of us need more of it. Particularly recent college grads transitioning from their campus to the workspace, from having student loans available that help pay their living expenses to having to make it on their own—all while paying back those student loans that paved their way to graduation.

With the surge in student loan debt outpacing the growth in starting salaries, and with tuition increases far exceeding increases in federal financial aid, a growing number of college graduates are facing barely manageable levels of student loan debt.

Tuition Hikes Outstrip Increases in Federal Financial Aid Awards

“Student aid continues to grow, but not as fast as tuition, and not enough to make up for the difference between family incomes and the price of college,” says Larry Abramson in a story for National Public Radio (“Tuition Hikes Outpace Student-Aid Increases,” Oct. 26, 2007).

According to the College Board’s “Trends in College Pricing” 2007 report, average published tuition and fees for in-state college students at four-year schools climbed by 6.6% for the 2007–08 academic year, a hike that “outpaced increases in the financial aid that lowers what most students actually pay” writes Erica Perez in the Milwaukee Journal Sentinel (“College Costs Outpace Inflation,” Oct. 23, 2007).

Starting Salaries Increasing More Slowly Than Student Debt

With more tuition to have to pay, students are graduating with more student loan debt than ever. In 2004, two-thirds of college graduates left school with student loans, and between 1993 and 2004, the average debt for college graduates with student loans soared a staggering 107%, according to a report by Luke Swarthout, a Higher Education Associate for the U.S. PIRG Education Fund. Student loan debt, Swarthout notes, is rising faster than both the cost of living and the cost of health care (“Student Debt and Consumer Costs in the Minneapolis–St. Paul Area,” July 2006).

Student debt levels are also eclipsing income gains. The “rapid rise in student debt comes while the real median income of younger Americans has only modestly increased” by 4.4% between 1995 and 2004 for household earners under 35, writes Swarthout.

Starting salaries for recent graduates can’t keep pace either. A report on “Student Debt and the Class of 2006” released by the Project on Student Debt found that for graduating seniors, average student loan debt rose 8 percent between 2005 and 2006, while starting salary offers rose only about 4 percent.

“Too many young people leave college saddled with heavy debt burdens and struggle to cover their loan payments on top of basic living expenses,” says Robert Shireman, Executive Director of the Project on Student Debt, in a press release for their recent study. “Students need better options and counseling when they’re deciding how to pay for college.”

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Student Loan Blog : Milwaukee Journal Sentinel

College Steps in After Edamerica Falls Behind in Dispersing Student Loans

Student Loan Debt Is on the Rise, and College Grads Face Growing Financial Obstacles