By Kristen Miller
Eastern students are already facing increased tuition and a hike in housing and meal plan costs because of the state budget cuts. But students in Kentucky may also face a cut to their student loans soon.The Student Loan People, the largest loan lender in Kentucky, notified Eastern and other universities that as of May 1, they wouldn’t be giving out any new loans. Shelley Park, Eastern’s director of financial aid, said this is largely because of the national financial crisis that has made money scarce.
Park said 80 to 85 percent of Kentucky students use The Student Loan People and 50 percent of Eastern’s student loans have gone through. From July 2007 to March 31, 2008, Eastern students borrowed $34 million from the company, which was popular because it gave benefits to teaching and nursing majors. These benefits included “interest forgiveness” for each year of service that was completed in the state.
“They gave benefits that students really liked,” Park said. But now, because of the financial crisis, these benefits won’t be available because the company can’t afford them.
The Student Loan People will continue to provide loans to students who have already borrowed from them.
“We do have six to seven lenders that they’ll be able to borrow from,” Park said. Park said these lenders will also be available for summer school students who may have been working with a lender that is no longer available because of the money crisis.
Park said another option for students is private loans. One loan in particular, the Stafford Loan, is not going anywhere anytime soon.
“No fear in that,” Park said. Everyone is eligible for the Stafford Loan, which is a loan given to students and have loan maximums based on the student’s year in school. But even though the money will be available for the Stafford Loan, many of the benefits that were given, like the ones given by The Student Loan People, won’t be available to students.
Several private loans, not including the Stafford Loan, are difficult to obtain because of the financial crisis. Private loans, according to a brochure given by financial aid, are supplied by nonprofit organizations that aren’t supplied by the government.
Park said many of these companies that provided loans have gone out of business because of the crisis. And many of these loans are “gap fillers” for students to cover what other loans or scholarships may not cover.
Karyn Yates, assistant director of financial aid, warns students who may be looking around at companies for private loans.
“Some of the private loans aren’t real good,” she said. “Students who need private loans need to shop carefully.”
Some companies, Yates said, such as the ones shown on commercials on MTV, charge high interest rates. Park said the student loan issue is constantly shifting.
“Things are changing in the student loan industry day by day,” she said. She said it’s something the students are going to have to deal with in the coming years.
“We’re stressed for the students,” Park said.
Yates said she is worried about the students paying for school on their own and said an incoming freshman who is only eligible for loans will only get about $1750 per semester.
“Those are the ones I’m concerned about,” she said.