Issue Date: 11/17/08
Economic crisis hits cash-strapped students
By Tony Pugh
On a recent Thursday evening, Neal Theobald, Indiana University's vice chancellor for budget administration, received a sobering letter from Sallie Mae, the nation's leading provider of student loans.
"Sallie Mae has made the difficult decision to tighten the underwriting on all our private student loan products, which will require applicants to meet higher credit standards," wrote Sallie Mae Executive Vice President Barry Feierstein.
The lending giant also announced plans to raise its loan pricing.
At a time when student financial-aid requests nationwide are up 16 percent, Sallie Mae's decision to make fewer loans at a higher price will deepen the financial pain of parents and students who already are struggling to pay for college educations.
Historically, when the economy starts to tank, students return to higher education in greater numbers.
"But with the credit crunch and money tight and the economy so bad, I think it's going to be difficult for students and families to pay that college tuition," said Roger J. Thompson, IU's vice provost for enrollment management. "I talk to parents fairly regularly, and they're struggling."
Amanda Daugherty was just a toddler when her father died, and she was still in high school when ovarian cancer took her mother's life.
Now only two months shy of her master's degree in public health, the 24-year-old Lafayette, Ind., native owes nearly $70,000 after financing almost all of her six-year college education with student loans.
The enormity of her debt first hit Daugherty last year after she received - for the first time - a bank statement that tallied all her loans, which then totaled nearly $60,000.
"I kinda freaked out," she recalled. "I saw it, and my stomach just turned. It almost didn't seem real."
Her more immediate concern is finding a position in the ultra-tight job market. Daugherty's already applied for more than 15 without success.
"I think there's going to be cutbacks in funding and I feel like people won't be as willing to hire new people into organizations," she said.
"Sallie Mae has made the difficult decision to tighten the underwriting on all our private student loan products, which will require applicants to meet higher credit standards," wrote Sallie Mae Executive Vice President Barry Feierstein.
The lending giant also announced plans to raise its loan pricing.
At a time when student financial-aid requests nationwide are up 16 percent, Sallie Mae's decision to make fewer loans at a higher price will deepen the financial pain of parents and students who already are struggling to pay for college educations.
Historically, when the economy starts to tank, students return to higher education in greater numbers.
"But with the credit crunch and money tight and the economy so bad, I think it's going to be difficult for students and families to pay that college tuition," said Roger J. Thompson, IU's vice provost for enrollment management. "I talk to parents fairly regularly, and they're struggling."
Amanda Daugherty was just a toddler when her father died, and she was still in high school when ovarian cancer took her mother's life.
Now only two months shy of her master's degree in public health, the 24-year-old Lafayette, Ind., native owes nearly $70,000 after financing almost all of her six-year college education with student loans.
The enormity of her debt first hit Daugherty last year after she received - for the first time - a bank statement that tallied all her loans, which then totaled nearly $60,000.
"I kinda freaked out," she recalled. "I saw it, and my stomach just turned. It almost didn't seem real."
Her more immediate concern is finding a position in the ultra-tight job market. Daugherty's already applied for more than 15 without success.
"I think there's going to be cutbacks in funding and I feel like people won't be as willing to hire new people into organizations," she said.
Be the first to comment on this story