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Monday, June 2, 2008

Monday, June 2, 2008

Student Loan Problems in Community Colleges

The New York Times has had good coverage of problems in the student loan industry - to put it politely. They have a good new piece on how some major banks are cutting back on loans to community college students, who are generally the least-well-off economically and who amount to 40% of the country's college students. The banks seem to be segmenting the student loan market, with loans to students at expensive private universities remaining fairly easy to get. "The banks generally say these loans are bigger, more profitable and less risky, in part perhaps because the banks expect the universities’ graduates to earn more." Some community colleges are getting redlined.

Michelle McClain, 40, who is studying to become a teacher, learned on Friday that she would have to find a new lender after Citibank dropped William Jessup University. The news angered her.

“The loan is between me and the lender,” Ms. McClain said. “I’m the one that’s taking out the loan, I’m the one whose credit is in jeopardy if I don’t pay it, I am the one totally responsible for the loan, and as long as I’m going to an accredited college, I don’t understand why it would make one iota of difference where I am going to college.”

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