Credit market constriction is limiting the financial aid available to college students. Here are some tips for shopping for a private loanThe college acceptance letters are coming in, and for many families the search for student loans is just beginning. For this year's crop of students, however, shopping for a loan, especially a private student loan, can be more difficult than usual because of turmoil in the credit markets (BusinessWeek.com, 1/17/08).
In the past few months, dozens of lenders have announced they are suspending some of their student loan programs or, in some instances, eliminating them entirely. The financial aid Web site FinAid.org, reports that 37 education lenders have exited or suspended their participation in all or part of the federally guaranteed Federal Family Education Loan Program. The outlook is grim for private lenders as well. Eleven lenders have suspended their private student loan programs, and seven nonprofit state loan agencies are also halting some programs.
"We're not trying to put fear into family and students' minds…but I think people will have to start earlier and work harder to ensure they can get the level of student loan they need," says Brett Lief, president of the National Council of Higher Education Loan Programs, a group that represents guarantee agencies and nonprofit lenders.
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