Daily Aid 43: Financial aid crisis arrives, December scholarships

Student Financial Aid News

From NASFAA and the Wall Street Journal:

“As Americans curb their spending and battle to keep up with credit cards and mortgages, another type of debt is starting to overtake people: student loans,” The Wall Street Journal reports. “Although the U.S. has experienced economic downturns before, never has one converged with such high levels of student debt. The fear is that default rates on student loans will increase, as seen in the mortgage and credit-card worlds. This time around, lenders – both federal and private – are working with borrowers to renegotiate loan terms to keep default rates low.”

Commentary

I would wholly expect defaults to increase on student loans. To combat this, students, especially college graduates, should look at deferment, forbearance, and student loan consolidation as measures to stave off default. We’ve got a helpful library of forms that will assist you in filing for any of these three options.

From NASFAA and the Sentinel Journal:

“Rheannon Gustafson could be a harbinger of things to come,” The Journal Sentinel reports. “Even after receiving federal loans, the 19-year-old freshman from Salem still owes about $3,200 for tuition and expenses at Winona State University in Minnesota this semester. Her parents can’t afford to fill the gap – they filed for bankruptcy this year. Neither Gustafson nor her parents can get private loans, because lenders have tightened standards during the credit crunch. Gustafson couldn’t find a job near school that could cover the bill. This perfect storm of economic circumstances has caused Gustafson and her parents to decide she’s dropping out after her first semester.”

Commentary

The coming financial aid crisis is no longer coming. It has now arrived. If you haven’t already talked to your college’s financial aid office and applied for as much financial aid as you can, now is the time to do it. Reports like this will only become more prevalent in the days and weeks to come.

Scholarship Update

The Hispanic Scholarship Fund has done a fabulous job of documenting awards that open up their application periods in December of 2008. Make sure you check out the list and apply for as many as you’re eligible for!

Details at our free college scholarship search site.

Mail Bag

Tosha writes:

If you get married say in September of the year before and your new spouses income is extremely high but you didn’t live with them, how come they still use their income?

The FAFSA uses their income because the government’s formula assumes that your spouse will be supporting you.