Newswire:

Students Get Slammed By The Credit Crisis

For the past number of years, U.S. students have faced skyrocketing tuition and unprecedented debt. Now, the nation’s credit crunch and teetering recession are threatening — and destroying — precious student loans. [Boston Globe]

More than 50 firms have abandoned or cut back their federal or private student loan programs this year, unable to raise money in the financial markets.

Earlier this week, Citigroup, one of the largest private lenders, said it would stop lending at some schools and end its federal loan consolidations.

Traditionally, student loans have been among the easiest and cheapest loans to get — allowing millions of Americans to go to college as long as they promised to pay the bills after graduation.

To compensate for the current dismal economic situation, many colleges are offering more assistance to students, such as more generous grants and direct government-backed loans with capped interest rates, such as Stafford loans.

Unfortunately, that’s not enough.

For example, if a private college costs about $45,000 a year, a typical family will have to come up with at least $20,000 on their own, whether from loans or savings.

So far, the only lenders that have committed to do student loans in the upcoming school year are big banks, like JPMorgan Chase & Co., Citizens Bank, Wachovia Corp., and Bank of America Corp.

What do you do if you can make the grade, but you can’t afford it?

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