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College credit crunch eases

College credit crunch eases

Finding the money for college during this widening credit crunch just got easier, thanks to emergency legislation signed by the president last week.  The new law raises the amounts that undergraduates can borrow under the federal student loan program. It also loosens the rules so parents who are behind on mortgage payments can still qualify for federal parent loans. And it gives them more time to repay parent loans.

The Baltimore Sun

May 13, 2008

 

Finding the money for college during this widening credit crunch just got easier, thanks to emergency legislation signed by the president last week.

 

The new law raises the amounts that undergraduates can borrow under the federal student loan program. It also loosens the rules so parents who are behind on mortgage payments can still qualify for federal parent loans. And it gives them more time to repay parent loans.

"It's long overdue," says Sharon Hassan, director of financial aid at Goucher College. "It took a crisis in the market for this to happen."

Congress worked quickly to reduce any credit crunch threat to education loans this year. The subprime mortgage crisis triggered the credit crunch that has now spread to other areas, including student loans. Dozens of private lenders that make loans under the federal program have said this year that they no longer will do so. And lenders have been raising their criteria for private loans, making it harder for students to get a loan if they don't have stellar credit or a co-signer.

 

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