Some of the biggest banking institutions are bailing on the student loan industry, referring to it as “unprofitable” and “a risky investment.” The hardest hit are community college students. Some providers, such as Citibank, JPMorgan Chase and SunTrust, are cutting their lists of colleges (mainly community and less-selective four-year colleges) whose students they will provide loans to, making students turn to other sources for pay for their college tuition.

Report by the New York Times:

By splitting out community colleges and less-selective four-year institutions, some remaining lenders seem to be breaking the marketplace into tiers. Students attending elite, expensive, public and private four-year universities can expect loans to remain plentiful. 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.

Lenders are keeping quiet on how many colleges they’ve dropped which makes it tricky to estimate how many students have been affected. Colleges who have higher default rates are more likely to be dropped. And since most lower-income students attend community and a easy-to-get-into four-year colleges, these schools are the ones being dropped in most cases. Read more…

If you need a loan for college, there is no question that federal loans are the way to go. The interest rates are low and fixed, fees are small and the government pays the interest for students while they are still in school and sometimes even after graduation if they become unemployed or face other economic hardships. Federal student loans are offered to all students, regardless of background, class or credit history. So it was a surprise to find out that some community college students cannot get any form of federal loans. Instead they are forced to go with more expensive private loans or find other alternatives to pay for their education.

While almost all four-year colleges and universities in the country participate in the federal loan program, a large number of community colleges do not. The students who attend these community college cannot get a federal student loan. As a result they are forced to resort to credit cards and costly private loans to fill the gaps in their finances.

So what’s the reason for not supporting federal loans? As summed up in an issue brief from The Project on Student Debt, colleges sometimes think that students should not borrow for a community college education to prevent student debt from ballooning for individuals. As the brief also points out, this is not realistic when students must still cope with the ever-growing costs of tuition and other costs. Even a bigger slap in the face is when colleges try to guide students to other, riskier borrowing options like private student loans. Read more…

With some student loan lenders no longer making loans under the federal program that subsidizes and backs low-interest loans, many students are left wondering where to turn for affordable student loans. Students and their families are being forced to look harder in fewer places. But fear not college bound students and worried parents, there is hope! There are great resources on the internet to help you find the loan that is right for you. Here are a few to get you started on the right path to find your perfect (and affordable) student loan.

Today there are many options when looking for a student loan and, for your convenience, you can shop from the comfort of your own home. There are many sites out there dedicated to providing tools and help to students and parents who would like to compare, shop and apply for a loan. Use eStudentLoan.com’s loan finder to get instant comparisons and online applications. Match your specific needs with loan programs from top lenders. The site is also packed with tons of useful info about all different types of loans including private, federal Stafford, federal PLUS, consolidations and student credit cards.

A leader in student loan comparison and shopping (and also a sponsor of this site) SimpleTuition.com can help you navigate all your student loan needs and learn your options. Save time, money and energy by comparing multiple student loan options from a variety of leading lenders all from one website. And when you’re done comparing, apply online or over the phone. Students and parents alike can take full advantage of the site’s library of facts and info on everything you’ll ever want to know about student loans. Read more…

From Yahoo! News: The Associated Press reported that last Saturday President Bush said the recent credit crisis is threatening the availability of student loans. His administration is doing what it can to help with emergency loans for new students for the upcoming fall semester but called to Congress for authority to do more.

Bush threw his support behind a House-passed bill that would grant the Education Department greater temporary authority to provide loans to students unable to secure ones from banks or other lenders. A similar measure by Sen. Edward M. Kennedy, D-Mass., is pending in the Senate. He has also told Congress to get the new legislation on his desk as soon as possible. With college students needing to secure loans for the fall semester, there is no time to waste.

Earlier this month the legislation passed the House in a 383 to 27 vote.

The House bill would raise limits on how much borrowers can receive under the federal program. It also tries to encourage parents to take out federal loans for their children’s education. The bill would allow parents to defer repayment of those loans until after their children leave school, which is currently not allowed.

The recent problem stems from dozens of lenders that have stopped making loans under the federal program that subsidizes and backs low-interest loans. Some students relying on private loans, which are not federally backed and can carry high interest rates, have had trouble getting those nonfederal loans due to those lenders. The lenders make up an estimated 13 percent of the student loan market. Read more…

Lenders of student loans have been feeling the effects of the recent credit and housing crisis and it’s now starting to affect the students who borrow from them. The problem they are facing is that they are unable to raise money in the financial markets like they normally do. While the credit crisis is being felt in all financial areas, it will now be hitting hard on the college students seeking private student loans and loan consolidations.

Earlier this month, The Education Resources Institute Inc., a Boston nonprofit that guarantees student loans, filed for bankruptcy and left the more than 500 students without means to pay their tuition and bills. This is a growing trend with more than 50 firms having abandoned or cut back their federal or private student loan programs.

Loans are going to be harder to come by and more expensive for students and parents who are applying for financial aid and loans for the upcoming school year. In the past, families used to secure student loans almost regardless of their credit history.

From the Boston Globe, Credit Crisis Hits Students Borrowers:

Student loans have been among the easiest and cheapest loans to get - allowing millions of Americans to go to college as long as they promised to pay the bills after graduation. Given this year’s challenging environment, many colleges are offering more assistance to students, such as more generous grants and direct government-backed loans with capped interest rates, such as Stafford loans.

This month also saw some bad luck for customers of Citigroup, one of the largest private student loan lenders. Citigroup announced it would stop lending at some schools and end its federal loan consolidations. This is a big problem for students and graduates looking to save in interest payments by consolidating their student loans. Bank of America Corp., the third-largest student lender in the country, is also jumping ship by saying they will no longer be offering private student loans. Read more…

I’m happy to announce that Helpmepaymyloans.com will be sponsored by the web-based student loan comparison tool, SimpleTuition.

SimpleTuition is dedicated to enabling students and families through the confusing education loan process with tools, resources and choices that help them to make informed decisions about getting loans for college. Like many search and comparison loan shopping sites, SimpleTuition is free for its users and features comparisons for all types of loans from top lenders such as NextStudent, SunTrust Bank, Susie Mae and Wells Fargo. SimpleTuition isn’t a lender, but a tool to learn about and compare various student loans and lenders. Read more…

Congratulations, you just graduated from college! If money is tight after the best years of your life and that dream job seems to be a little too elusive, you may have to think about student loan deferment and forbearance.
Warning: you should only use deferment and forbearance as a last resort. With that in mind, here is your guide to student loan deferment and forbearance.

If you’ve exhausted your options and can’t get relief, you may be able to suspend your payments temporarily. A deferment is when the lender/servicer grants a temporary suspension of a borrower’s monthly payments. To defer your loan repayment, you must meet certain specific conditions. Read more…

With the coming recession being no joke, students with loans are all thinking the same thing - Will my interest rate stay the same? Will I still be able to make payments? How will the recession affect my loans!? Things are projected to get worse before they get better. But how bad is it and will it really affect student loans? Read more…

According to FinAid, the leading guide to financial aid, students relying on college loans will soon feel the negative effect from the subprime mortgage crisis.

Subprime borrowers will not only have more trouble securing a student loan, but all student borrowers will be subject to stricter lending practices such as higher credit scores needed to secure student loans. Those loans will also be tied to higher interest rates. Read more…

After much work and toil Helpmepaymyloans.com has launched! As a former student with large student loans, I wanted a place where students, old and new, could get resources and info about student loans in one place; resources like consolidation tools to news about changes in the laws that affect student loans. It seemed logical to bring all this under one place, one site. In the coming months this site will be packed with facts, tips, resources, news and information about student loans and related topics, like college tuition, building credit, managing your money and more.

If you have a tip for me or think there is a good story to cover, please let me know by emailing me at derek@helpmepaymyloans.com. Check back often for the latest news!