Dec 22 2008
Despite the alarm about volatile credit markets, financial aid directors at local colleges and universities say they haven't heard from many students who can't get loans to cover college costs.

But college administrators say they will closely watch for problems next semester and beyond as families begin to feel the full force of the recession.

"Folks aren't coming in and telling us they're having difficulty," said Susan Fischer, director of the UW-Madison office of student financial services. "I think if things hit it will be semester two."

Fischer said about 10 percent of UW-Madison students rely on private loans when federally guaranteed loans, grants, scholarships and other sources of income have been exhausted.

Although some banks are no longer offering alternative student loans, students have been able to turn to other financial institutions, like credit unions, Fischer said.

For the 2008-09 academic year, 17,000 undergraduates were awarded some form of aid. About 29,000 undergraduates are enrolled at UW-Madison.

Some universities are coping with tighter credit markets by beefing up emergency funds for struggling students.

At UW-Oshkosh, university employees have given more than $4,000 to a newly created Student Financial Emergency Response Fund, which has a budget of $270,000.

Through the fund, students can get up to $1,000 in a short-term, low-interest loan if they're having unanticipated financial problems, like a parent who loses a job.

The university gave out 84 emergency loans in the fall semester, 16 more than fall semester 2007.

"We have seen an increase in students having financial difficulties, needing a short-term loan to cover extenuating circumstances," said Petra Roter, vice chancellor for student affairs at UW-Oshkosh.

At Edgewood College, several programs — such as Associated Bank, Student Loan Express and Campus Door — are no longer offering alternative loans to students, said financial aid director Kari Gribble.

Most students at Edgewood applied for a full year of student loans in the fall, before the brunt of the credit crisis hit, she said.

"At that time we did have a number of lenders that contacted us to let us know they were significantly tightening up credit criteria," Gribble said.

Part of the reason students may not be struggling to get private loans is because the federal government increased the amount of unsubsidized loans they can get by $2,000, said Tim Jacobson, director of financial aid at Madison Area Technical College.

Interest accrues on unsubsidized loans while students are in school.

While some banks are getting out of the student loan business, at least one local credit union has jumped in, through a program with CUNA Mutual group. Summit Credit Union began a private student loan pilot program this summer.

"We really think there's a need for this and we can help our members fund their college education," said President Kim Sponem.

Source: http://www.madison.com/wsj/hom