More Lenders Dropping Student Loans

Some 900,000 students scrambling for alternate ways to pay tuition this fall
By Jim O'Neill,  Newser User
Posted Aug 11, 2008 8:18 AM CDT
Graphic shows the rise in college tuition in the past decade.   (AP Photo)
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(Newser) – Continuing turmoil in credit markets has prompted more private lenders to cut back or eliminate education loans, leaving thousands of student borrowers without the cash they need for college, reports the Wall Street Journal. Last week Wachovia joined more than 2 dozen banks that have cut funds available to students, as investors have backed away from the notes they use to raise capital.

Even when cash is available, say experts, it’ll be tough to borrow without excellent credit. Hardest hit will be lower-income students attending schools that provide career training. Some 900,000 students—about 10% of student borrowers—depend on private lenders, to the tune of $17.1 billion annually. Private borrowing has multiplied more than tenfold over the last decade, the Journal reports, as government grants and loans have fallen behind the cost of tuition.