With Acceptance Letter Comes Financial Uncertainty

Tuition deposits for incoming freshman were due at most schools on May 1, forcing many to pull the trigger on their college choice, regardless of lingering questions about how to pay for it.

 
 

As the saying goes, “April showers bring May flowers.”  While those flowers may be a welcome sight to many, the month of April brings another sight to millions of college students and families that may not be nearly as pretty.

In late April, mailboxes of current and aspiring students are filled with “award letters” from their college of choice. The letter defines the amount of financial aid (scholarships, grants, Federal Stafford loans, etc.) for which the student has qualified, and also outlines an “expected family contribution”—the gap that is left behind after low cost sources of financial aid have been exhausted and must be filled by the student and/or family.

Student Loan Financing Gap

As a recent New York Times article points out, with the cost of education continuing to rise and families facing extreme economic challenges due to plunging home values and other financial setbacks, filling the “gap” is more difficult than ever. Tuition deposits for incoming freshman were due at most schools on May 1, forcing many to pull the trigger on their college choice, regardless of lingering questions about how to pay for it.

Private student loans are a key component in helping students and families fill educational funding gaps. While Government legislation has closed the door on financial institutions originating Federal student loans, the opportunity in private student lending remains wide open. In fact, due to the mass exodus of lenders after the collapse of the secondary market in 2008, the opportunity for credit unions has never been greater.

 

 

 

May 4, 2010


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