Student loan system remains viable amid financial crisis

The continuing financial crisis and accompanying tight credit markets -- along with a number of misleading stories in the news media -- have created confusion and uncertainty for students and families about the availability of college loans, according to Del Morley, Northwest’s director of financial assistance.

Fears that college loans are, or may became, unobtainable for many students and their families are largely groundless, Morley said.

Northwest, he noted, is a participant in the William D. Ford Direct Loan Program, which does not rely on private financial institutions and uses funds that come directly from the federal treasury.

“We have experienced no delays or interruptions of service of any kind, and we do not expect any problems in the future,” Morley said. “The student loans made through this program do not require a parent co-signer or credit check, so credit-worthiness is not an issue. As long as students are enrolled and making satisfactory academic progress toward a degree, they are considered a good credit risk for federal loans.”

Northwest also processes Parent Plus Loans through the Direct Lending Program. While these loans do require a credit check on the parent borrower, denials are primarily based on late payments or defaults rather than unsatisfactory credit ratings. Many families can therefore be approved for such a loan who might not be able to obtain traditional private-sector financing.

As for the availability of financial aid programs generally, Morley pointed out that there continues to be strong government support for increased affordability and wider access to higher education. Examples, he said, include the recent passage of the Higher Education Reauthorization Act, which extends authorization for federal financial aid programs.

Both presidential candidates have voiced support for affordable access to higher education, and Morley and other observers expect federal efforts to provide financial aid while simplifying the application process to continue.

For those families who do decide to finance college using private lenders, Morley offered both encouragement and a word of caution:

“At Northwest, we always urge students to exhaust all federal and state aid possibilities first, so that they and their families do not have to rely heavily on private student loans,” he said. “However, those who do opt for private lenders should be aware of recent trends in the industry.”

Those trends include the decision by a number of private lenders, who generally require a credit-worthy co-signer, to withdraw from the student loan market altogether. This has forced some students to seek new financing sources. However, lenders who have remained in the student loan market continue to demonstrate a willingness to make loans to Northwest students.

“To date, our students have not experienced any more problems with approval ratings (from existing commercial lenders) than in the past,” Morley said. “One reason for this is that our default rates are very low, and those lenders still in the private loan market are very willing to work with our students.”

Morley acknowledged that the financial crisis is serious and will continue to affect the lives of millions of Americans. He emphasized, however, that the federal college loan system has money available to help students make their college dreams come true.

“Federal aid is available now and will continue to be available for students wishing to pursue a college degree at Northwest Missouri State University,” he said.

Anyone seeking more information about financial aid at Northwest, including current students with questions about their existing package, should e-mail the University’s Office of Financial Assistance at finaid@nwmissouri.edu or call 800.633.1175. (On campus, call ext. 1363.)

For more information, please contact:

Anthony Brown,
News Bureau Manager
E-Mail: abrown@nwmissouri.edu
Phone: 660.562.1704
Fax: 660.562.1900

Northwest Missouri State University
219 Administration Building,
800 University Drive
Maryville, MO 64468

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