Impact of the Credit Crisis on Student Loans
Private student loans, on the other hand, continue to suffer from availability issues. Three-quarters of the lenders offering private student loans, representing about a third of the private student loan volume, have suspended their private student loan programs. The remaining lenders are still liquidity constrained, and have reacted by tightening their credit underwriting standards and increasing interest rates.
- In early 2007, borrowers could obtain traditional private student loans with credit scores as low as 620 and non-traditional private student loans with credit scores as low as 520.
- Today, all of the non-traditional private student loan programs have evaporated and traditional private student loan programs are requiring credit scores of at least 650 and in many cases over 700. Even borrowers with credit scores over 750 are finding it more difficult to obtain private student loans.
- Students enrolled at foreign medical schools are also experiencing a reduction in the availability of private student loans.
Reprinted with the permission of FinAid. © 2008 by FinAid Page, LLC. All rights reserved.
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