Student Loans At Risk?

Carl writes:

"As a current medical student taking many thousands of dollars out a year in student Chase loans, are my loans at risk of being cut off? I don't know how far these economic problems will reach and am becoming increasing worried about the economic future of our country."

For this one, I turned to Anya Kamenetz, author of Generation Debt, a crucial book about student borrowing (and so much more).

Kamenetz responds:

"The credit crunch started to make itself known in the student loan market this summer. To date, 111 lenders have pulled out of the Federal Family Education Loan Program (here's the full list)

"That's still a small percentage of all lenders, and many of the bigger student lenders, including Chase, have actually been growing their loan portfolios to take up the slack. So you have no immediate worries. As a medical student, with a relatively high expected income, you are a good risk for student loans.

"That said, private lenders may continue to exit the program without warning as credit gets tighter. That's why your best bet, if you're worried about this issue, and if your medical school accepts them, may be to switch to the Direct Loan Program, where your funds come directly from the Treasury. In fact, should the Democrats prevail in November, their proposal is to phase out FFELP loans in favor of Direct Loans.

"With the economy the way it is, your broader focus should be on limiting your total debt as much as possible by keeping your living expenses down while in school."

Anya Kamenetz
Author, Generation Debt
akamenetz.blogspot.com

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