Exploring Economics: Part 4
College loans feel waves from 'Ripple-effect'
By: Sun Cha, Editor-in-Chief
Issue date: 11/7/08 Section: News
College students around the country are discovering how difficult it is to find funding for their education as many lenders are left in the wake of the recent financial crisis of the nation's economy.
Due to a surge of risky investments in the subprime mortgage market, many financial institutions are now hesitant or unable to give out loans.
In a New York Times article published on Sept. 30, 1999, Steven A. Holmes covered the Fannie Mae Corporation's move to ease credit requirements on options that it purchased from other lending institutions.
Instead of placing emphasis on the Republican's part in de-regulation, Holmes found that the Clinton Administration and stockholders in Fannie Mae had something at stake as well. Not only is Fannie Mae one of the biggest home loan underwriters, it also holds a large market share in the student loan industry.
"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgages among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits," Holmes wrote.
Since the crisis has emerged, 111 lenders have suspended their Federal Family Education Loan Programs (FFELP), this according to a list published by the National Association of Student Financial Aid Administrators, or the NASFAA. Of the 20 preferred lenders at ASU, only two have suspended loans and 4 have suspended consolidations.
But still, Sophomore Jessica Leonard is worried about her future at ASU without the assistance of financial aid, especially since the institution she has chosen as her preferred lender is Wells Fargo, a San Francisco based bank, which has already removed itself from the list of lenders who consolidate existing student loans.
"I still haven't received my financial aid check from this semester and it's almost over. I mean, why haven't I gotten it and what if I don't get the check for the next semester either? This is really stressing me out."
Due to a surge of risky investments in the subprime mortgage market, many financial institutions are now hesitant or unable to give out loans.
In a New York Times article published on Sept. 30, 1999, Steven A. Holmes covered the Fannie Mae Corporation's move to ease credit requirements on options that it purchased from other lending institutions.
Instead of placing emphasis on the Republican's part in de-regulation, Holmes found that the Clinton Administration and stockholders in Fannie Mae had something at stake as well. Not only is Fannie Mae one of the biggest home loan underwriters, it also holds a large market share in the student loan industry.
"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgages among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits," Holmes wrote.
Since the crisis has emerged, 111 lenders have suspended their Federal Family Education Loan Programs (FFELP), this according to a list published by the National Association of Student Financial Aid Administrators, or the NASFAA. Of the 20 preferred lenders at ASU, only two have suspended loans and 4 have suspended consolidations.
But still, Sophomore Jessica Leonard is worried about her future at ASU without the assistance of financial aid, especially since the institution she has chosen as her preferred lender is Wells Fargo, a San Francisco based bank, which has already removed itself from the list of lenders who consolidate existing student loans.
"I still haven't received my financial aid check from this semester and it's almost over. I mean, why haven't I gotten it and what if I don't get the check for the next semester either? This is really stressing me out."
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