The president of the nonprofit organization that services federally guaranteed students loans for college students says they’re working with lenders to be sure loans are available. The sub-prime housing loan problems have raised concerns about the availability of college loans, but Iowa Student Loan’s Steve McCullough says his organization has been working on the issue with the banking and credit union associations.
McCullough says the groups have helped pull lenders throughout the state together to supply the funds that normally would come from the credit market, to ensure there are loans available. He says some 276 lenders across the state are going to help. McCullough says students won’t see much difference in these loans and the traditional loans. He says the interest rate is set by statute, so students don’t have to worry about the rates on guaranteed students loans, this will simply help ensure there’s money available for the loans.
McCullough says their immediate goal is to make enough guaranteed loans available. McCullough says some 60,000 students borrowed through the program last year for guaranteed loans. McCullough says students will soon start the process of applying for the loans.
McCullough says right now colleges are starting to send out aid letters to let students know how much aid they’re getting from the schools for the next year. He once students know how much money they’re getting from the schools, they then start the process of borrowing the rest of the money.
McCullough believes the agreements with the banks and credit unions will make enough money available in a time when there’s a potential shortage from the traditional funding sources for the student loans. “We’re confident that there’s going to be guaranteed student loans available this fall, thanks to the hard work of the lenders who’re steeping forward,” McCullough says. McCullough says for students who’re taking out private loans for college, they may want to start the process earlier, and may want to get a co-signer for their loans if they haven’t had one in the past.
McCullough says students borrow and average of $20,000 from the guaranteed program over their four of five years in college.