By Laura Acuff, Opinion Editor
Reports of diminishing availability of loan money in conjunction with a recent increase in Stafford loan amounts seem to present conflicting information to money conscious students.
While Darrell Horn, associate director of Counselors for Student Financial Services, said adquiring loans may be more difficult nationally, ACU students have little reason to worry.
“Nationally, we hear the news about that, and we know it’s happening,” Horn said, “but our students don’t appear to be seriously impacted by that.”
Alternative, private loans, “outside the federal realm,” that sell loans to loan servicing organizations make up the struggling lender branch.
“There was a secondary market for loans where lenders used to be able to go out and auction these loans off, and investors would buy them, and they’d be gone, and they had capital. They could issue more loans,” Horn said. “[The investors] hold [the loans] and collect them. They were good investments. They were good investments until the mortgage crisis started ruining everything.”
Recently, some lenders have raised required student credit scores for loan approvals, and some lenders exclude certain schools from their clientele because of high default rates, Horn said.
The lenders’ increased precautions, however, affect ACU students less because of the university’s low default rate.
“Our students pay their student loans back, and because of that, lenders love doing business with us. They court our business,” Horn said. “Our roots have a lot to do with our default rate. There’s no question, and we still attract a student body that has a Christian orientation because of who we are and what they know about us when they get here.”
The fact ACU Financial Services encourages students to seek government loans before private, alternative student loans also helps students brace against nationally declining loan numbers.
Horn said government loans are preferable because of their capped interest rates. While private, alternative loans may raise interest rates as students use and, later, pay them off, Stafford loans and Parent Plus loans have interest rates that never raise above parameters set by the government at the time of the signing.
“At ACU, we have always encouraged our students to use their Stafford eligibility first and go to these private, alternative student loans only as a last resort,” Horn said. “It’s because we’ve always trusted the Stafford loans more than the private because the government was regulating them.”
At the worst, the situation seems only a “minor inconvenience” for ACU students who found their previous lender was no longer participating and had to sign a new master promissory note with a new lender, Horn said.
“It is complicated the way everything is tied together, but bottom line for our students: they don’t have a whole lot to worry about this fall,” Horn said. “In our conversations with students last week, this week, we’re not seeing a whole lot of panic or a whole lot of trouble getting any kind of student loans. Some folks are [having trouble] in other places. I see it in the news, but it doesn’t seem to be happening here.”