Absence of private loans makes college financing a challenge

A faltering economy is, not surprisingly, creating greater challenges to pay for a college education. Private loans, in particular, are harder to obtain.

So said Randy Green, director of financial aid at Wittenberg University in Springfield, and Tasha McDaniel, the school training director of the Great Lakes Higher education Guaranty Corp. in Columbus.

"We've seen quite a few private loans leave the business," McDaniel told the hundred or so parents at Granville High School's annual Financial Aid Night last week. "They're no longer available for students. There are probably about 25 to 30 private loans that have been eliminated in the past six months or so."

Because of the credit crunch many of the private lenders have changed their criteria to make it even tougher for students to be able to apply.

"They're more cautious now because they've had a lot of bad loans they had to write off," McDaniel added. "And because these loans are uninsured, the credit criteria have become a lot more strict and private loans have become a lot more expensive."

Eric George, the branch manager of the Huntington National Bank in Granville, said its best solution is a conventional bank loan, "the main product being a line of credit based on the equity in your home," he said. "That's probably the easiest, quickest and cheapest way to try to accomplish that goal."

So money is available -- it's just harder to find.

"There's a lot of money out there for students," Green said. "The problem is there's no central source. They're scattered all throughout the country."

Green recommends searching the Web for scholarships, one source being www.fastweb.com.

Locally, Denison University has been little affected by the private lender market because the school doesn't use many private lenders. Instead it's what's called a direct lending institution.

"We are designated by the federal government to loan federal money through a revolving loan fund," Denison President Dale Knobel said. "That money comes through Denison and as it's paid back it goes into this federal revolving loan fund."

More than 90 percent of the 2,055 students on the Denison campus receive some form of aid from the college, either on an all-needs basis, which is true financial aid, or a merit-based scholarship, or a combination of the two.

"Nearly all of our students receive some form of grant aid that buys down the cost," Knobel said. "The result is while our sticker price for tuition is $34,410 a year, on average this year, for the 90 percent-plus students who receive aid, they're paying on average $12,536 a year."

Knobel acknowledge some students still seek outside loans, but they would be relatively few compared to many institutions.

"So we've been much less affected by restrictions in the private loan market," he concluded.

Denison aside, once you've gone through the admission process and you're accepted to a college and a financial problem arises that impacts your ability to pay, Green said, "You need to let us know. There may be things the school can do to help you out. But we can't help if you don't talk to us. If someone gets laid off, if someone gets sick, whatever the situation is, you need to build up that rapport."

http://www.newarkadvocate.com/article/20081210/COMMUNITIES02/812110336

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Absence of private loans makes college financing a challenge