Many college students feeling credit crunch
LANSING — The credit crunch is beginning to hit college students in Michigan, but long-term effects are yet to be seen.
Josh Davis of Flat Rock, a senior at Michigan State University, said he has relied on private and federal financial aid to pay for his education. He locked in his private loan rates early this fall, before the financial crisis.
“The rates were low in August, so I locked them in,” he said. “They could have risen or fallen, but I wanted to make sure I was getting the best deal.”
Davis, a mechanical engineering major, may have made the wisest possible move.
Nearly 90 percent of universities that use private student loans lost some lenders after the credit crisis began, according to a new survey by the National Association of Independent Colleges and Universities in Washington. At Central Michigan University, for example, many students were turned down for private loans when lenders tightened their eligibility criteria, said Diane Fleming, associate director for scholarships and financial aid.
She said that although most students apply for aid early in the calendar year, many others are applying for federal parent loans and alternative student loans now.
About a quarter of 950 national survey respondents said finding a new lender became difficult after their lenders flopped. And three-quarters of institutions responding to the survey said more students are asking for financial aid this year than last year.
Don’t look at the state to pick up the bill. Growing states like Nevada, Alabama and North Carolina are investing more money in higher education, but Michigan is cutting back. Michigan has been last in legislative increases for higher education for the last five years, while state budget cuts have reduced state aid per student by $2,853 since 2001, according to the Presidents Council, State Universities of Michigan.
“We have no money. The state dropped its one student loan program because of the financial markets. And if you lower the state funds, tuition will be higher,” said Michael Boulus, executive director of the council, which represents all 15 of Michigan’s public universities.
It may be too soon to see any significant negative impact of the credit crunch on enrollment.
Ferris State University students are doing fine, said Melanie Mulder, its financial aid office coordinator.
“We’ve had a couple of lenders who folded but we’ve been able to replace those with other lenders. So far there doesn’t appear to be any impact on our students,” Mulder said.
The national survey said that although most universities reported no negative impact on enrollment after the credit crunch began, 18 percent said fewer students returned this fall than they had expected. And 19 percent reported there was a smaller incoming freshman class than they had expected.