Daily Aid 29: The credit crisis hits college campuses

Student Financial Aid News

From NASFAA and the AP:

“The credit crunch has officially arrived on campus,” the Associated Press reports. “In a new survey, private colleges report their students are finding it significantly harder to secure the private loans they need to pay tuition bills. More alarmingly, nearly half of colleges say some students have been forced to take time off or go part-time as a result. The survey, released Tuesday by the National Association of Independent Colleges and Universities, confirms anecdotal evidence that the federal financial aid system has held up reasonably well during the financial meltdown. But it paints a more troubling picture for students who need private loans to supplement their federal ones.”

Commentary

This is no surprise to anyone who has been a longtime listener and reader. We’ve talked about this day coming, and the bad news is that it’s only going to intensify as we enter 2009. Private student loans have already become harder to get, and as we enter 2009, more students than ever will be applying for college, more students than ever will be entering college, and more students than ever will be applying for financial aid from the same pool of dollars.

As pointed out in this BusinessWeek article, hedge funds may face a record redemption call on November 30 as investors are given a final chance in 2008 to redeem their holdings. What does that mean for you? If investors remain uncomfortable or shaky, they may pull a lot of money out of the market, further tightening credit and reducing the value of things like 401k and 529 plans.

Jim Cramer of CNBC made a good call – if you have money in a 529 plan and you need it in the next year or so, talk to your investment advisor about getting the money out of the market or at least shifting it to wherever your advisor thinks is the safest. Markets in the short term aren’t getting better and probably won’t for some time.

If you’re concerned about paying for college, make sure you complete your FAFSA after January 1, 2009 for the 2009-2010 school year. Make sure you’ve done your taxes. Make sure you’re applying for as many scholarships as you can. If you’re currently attending school and having a hard time making ends meet, consider taking a semester or two at a less expensive school or taking some online classes if they’re cheaper per credit hour. If you aren’t already on friendly terms with your college’s financial aid office, now is a great time to make friends with them. Do something nice for them, even if it’s just an email to say thanks for the thankless work. Make sure you’re on their radar so that down the road, if you need help, they will pick up the phone for you.

The message is this: right now, the markets and government are so tied up in the broad financial crisis that you as a student or parent are pretty much on your own. You are responsible for your financial aid, and you will ultimately be the deciding factor about how affordable college is. As much as we can here at the Student Loan Network, we’ll help you with as much information and services as we can, but ultimately, the final outcome is up to you.

That said, if you’re reading this blog post, I have full faith and confidence in you, because you already care enough about financial aid to want to do something about it, to want to read about it more than once a year, to want to tune into the Financial Aid Podcast. As you work through the financial aid maze and the financial crisis, please stay in touch and let me know how it’s going for you.

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