Is there a college financial aid crisis?

By Ray Weikal

The nation’s college financial aid system isn’t in a crisis, many experts agree. Not yet, anyway.

Prompted by the housing market downturn and credit crunch, national and regional news outlets have run recent stories about growing concerns about whether enough money will be made available for students to pay for college this fall.

Should parents and students be worried? “No,” according to Sandy Baum, an economic professor at Skidmore College and senior policy analyst at the College Board.

“Right now, we don’t feel like there’s a federal loan crisis,” Baum told education reporters on April 25 in Chicago.

MelaDee Patterson is a counselor at Park Hill South High School. She agreed with Baum that students don’t seem to be loosing more sleep than usual over getting college loans.

“I’ve not seen a lot of concern with our students,” Patterson said.

Still, the financial aid system has definitely experienced some hiccups this year, according to www.finaid.org, a site devoted to providing information about how to pay for college. Since August, 2007, dozens of lenders have completely pulled out of the federal loan system.

In the Kansas City area, there were some ripples when the Missouri Higher Education Loan Authority announced it would no longer issue private student loans. More recently, Security Bank of Kansas City suspended its participation in the Federal Family Education Loan Program.

Last year, Congress cut federal subsidies for lenders. The credit crisis and recession have also made financial institutions leery of lending.

The students who raise the most concern among financial aid experts are those with average grades and low family incomes. In the years of easy credit, many of these students got used to paying for things like room and board with private and home equity loans, according to Baum.

“The problem is many families use home equity loans to pay for college, and those loans may not be available,” she said.

Steve Burd, a financial aid expert with Higher Ed Watch, agreed with Baum.

“Private loans have been too easy a solution,” he said.

Parents and students are being advised to get good advice and not give up as they search for ways to pay for college.

“We don’t know how many students bail out of the process,” said Cindy Butler, a financial aid adviser with Metropolitan Community College. “Families should let us help them.”

Staff writer Ray Weikal can be reached at 389-6637 or rayweikal@npgco.com.