US Government Makes Student Loans Available
In early 2009, the U.S. government purchased billions of dollars in federal student loans to fill the gap now that banks and private investors are not lending as much. How will this affect the future of the U.S. federal student loan program in 2009-2010?
(EMAILWIRE.COM, July 21, 2009 ) July 21, 2009 New York, NY
Did you obtain a federal student loan during the 2007-2008 school year? If you did, chances are that the federal government now owns your loan. Starting in 2008, the federal government began purchasing as much as $500 million per week in federal college loans.
Why? Because, according to U.S. Secretary of Margaret Spellings, the United States government wants to insure that students continue to have access to federal loans. As a result of the credit crunch, numerous banks and lenders chose to stop handling federal student loans.
Fewer private investors have been available to guarantee these loans, which were previously marketed as security or investment packages. This is because the instability of the current economic market makes these loan packages much less attractive to private investors.
Because these private investors were no longer available, the U.S. government announced it had no choice except to step in and buy the loans. If the Department of Education is able to buy enough federal loans, the securities previously backing these loans can be made available to back federal student loans for other borrowers. The purchase, however, is designed to be only a short-term solution to the problem.
The anticipated long-term solution, according to Department of Education executives, is the implementation of a new program, designed as an improvement on the current federal loan system, is expected in the near future, according to the Department of Education. This program was announced in November 2008, but its effect on the current federal loan process remains to be seen.
"Students must learn the total tuition cost of their degree before they enroll," said Sheila Danzig director of Degree.com a premier internet portal for online degrees and online learning. "Studies have found that students who inquire at three or more school end up paying less in tuition and getting more in aid than those that enroll in the first school they look at. We at Degree.com suggest students gather as much information before they start and welcome them to visit www.degree.com to get free information about the programs that are of interest to them.
The number of students obtaining federal education loans has not yet been affected by the economy. At present, officials believe that the present buy-up of federal student loans will be enough to offset any present hardship that the education loan process may face. If the economic crisis continues, however, the number of federal loans available could be significantly reduced by the unavailability of private investors and lenders.
Certainly, the United States treasury does not have limitless resources to purchase these loans. If the economic crisis continues into the 2009 school year, as seems likely at this point, the Department of Education will may have to request that Congress allot additional funds to guarantee 2008-2009 federal student loans. Depending on the extent of the crisis, this could also mean that, in future, fewer student loans may be available to borrowers.
For more information about federal financial aid, or to stay up to date on the latest government policies affecting education and financial resources, visit http://www.degree.com/financial-aid/federal-student-aid/financial-aid-student-loans.htm.
Did you obtain a federal student loan during the 2007-2008 school year? If you did, chances are that the federal government now owns your loan. Starting in 2008, the federal government began purchasing as much as $500 million per week in federal college loans.
Why? Because, according to U.S. Secretary of Margaret Spellings, the United States government wants to insure that students continue to have access to federal loans. As a result of the credit crunch, numerous banks and lenders chose to stop handling federal student loans.
Fewer private investors have been available to guarantee these loans, which were previously marketed as security or investment packages. This is because the instability of the current economic market makes these loan packages much less attractive to private investors.
Because these private investors were no longer available, the U.S. government announced it had no choice except to step in and buy the loans. If the Department of Education is able to buy enough federal loans, the securities previously backing these loans can be made available to back federal student loans for other borrowers. The purchase, however, is designed to be only a short-term solution to the problem.
The anticipated long-term solution, according to Department of Education executives, is the implementation of a new program, designed as an improvement on the current federal loan system, is expected in the near future, according to the Department of Education. This program was announced in November 2008, but its effect on the current federal loan process remains to be seen.
"Students must learn the total tuition cost of their degree before they enroll," said Sheila Danzig director of Degree.com a premier internet portal for online degrees and online learning. "Studies have found that students who inquire at three or more school end up paying less in tuition and getting more in aid than those that enroll in the first school they look at. We at Degree.com suggest students gather as much information before they start and welcome them to visit www.degree.com to get free information about the programs that are of interest to them.
The number of students obtaining federal education loans has not yet been affected by the economy. At present, officials believe that the present buy-up of federal student loans will be enough to offset any present hardship that the education loan process may face. If the economic crisis continues, however, the number of federal loans available could be significantly reduced by the unavailability of private investors and lenders.
Certainly, the United States treasury does not have limitless resources to purchase these loans. If the economic crisis continues into the 2009 school year, as seems likely at this point, the Department of Education will may have to request that Congress allot additional funds to guarantee 2008-2009 federal student loans. Depending on the extent of the crisis, this could also mean that, in future, fewer student loans may be available to borrowers.
For more information about federal financial aid, or to stay up to date on the latest government policies affecting education and financial resources, visit http://www.degree.com/financial-aid/federal-student-aid/financial-aid-student-loans.htm.
Contact Information:
Degree.com
Sheila Danzig
Tel: 954.905.4942
Email us
This is a press release. Press release distribution and press release services by EmailWire.Com: http://www.emailwire.com/us-press-release-distribution.php.
Degree.com
Sheila Danzig
Tel: 954.905.4942
Email us
This is a press release. Press release distribution and press release services by EmailWire.Com: http://www.emailwire.com/us-press-release-distribution.php.
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