Top banks dropping college students

Some of the nation's largest banks are getting out of the business of community college federal tuition loans, but local administrators say students shouldn't worry about financing their education.

Clark State and Edison Community College have been notified that JPMorgan Chase will not longer offer federal loans to their students — a move the lender is repeating nationally, reserving its credit to more costly colleges and universities. Citibank, PNC and SunTrust are also dropping smaller colleges, with Citibank being the most aggressive.

Congress, last year' "sharply reduced the subsidy on federal student loans," said Chase spokesman Tom Kelly. "At the same time the credit markets have tightened, dramatically making it very difficult to (offer) student loans on the secondary market."

Chase continues to offer private loans at some dropped schools, Kelly said. The interest rates on private loans are typically higher than a federal loan. It is awarded according to an individual's credit worthiness.

Sinclair Community College officials said they knew of no banks that had dropped loans to their students, the school's senior vice president, Robert E. Johnson, said. Johnson does not see it as a lending crisis for students — especially those with lower income.

"Our cost is so low a student who comes from a low income family does not have to take out a loan," he said. "A full Pell Grant will take care of their cost, which is a little over $2,000 a year."

A Clark State spokeswoman said they had no trouble finding other lenders for 10 of their students who had been dropped. But the spokeswoman, Jennifer Dietsch, finds the potential disheartening.

"This is just another barrier for students who already have enough barriers to overcome," she said. The average community college student is typically older than a traditional university student with other obligations such as jobs and children, she said.

While some lenders are bailing out, "there are plenty others who are willing to lend," said Edison State spokeswoman Kathi Richards. "The last thing we want to happen is that students will be fearful they can't get funding."

http://www.springfieldnewssun.com/hp/content/oh/story/news/local/2008/06/08/

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Top banks dropping college students