By: Chris Parker, freshman
3/27/2008

Believe it or not, getting enough money for college could become even tougher.

Recent reports from many student loan firms indicate they are going to charge higher interest rates for their loans, and loans in general will become harder to get. According to an article in the Washington Post, the new crunch has a lot to do with the lagging economy.

What will this mean for you as a student at Friends University?

Brandon Pierce, the director of Financial Aid at Friends, said students do not have anything to worry about yet.

The more expensive loans would come from private lenders, which are a last resort, Pierce said.

“We try to exhaust all the other alternatives before we send a student to a private lender,” he said.

These steps include applying for government loans such as the subsidized Stafford loan, which has a fixed interest rate. Then students can apply for Parent Plus loans and unsubsidized Stafford loans. Only after students have exhausted all the money available with these two types of loans will private loans become a viable option.

Private loans are suspected to be the harder loans to get.

“Let me just say it wouldn’t surprise me,” Assistant Director of Financial Aid Tony Lubber said about whether private loans were going to become more difficult.

Private loan interest rates are already much higher than the government Stafford loans. Lubber said he has seen private loan interest rates as high as 15 to 19 percent, but around 11 percent is average. This is still much higher than the fixed 6.8 percent rate of the Unsubsidized Stafford Loan.

“The way the system is in place now, it’s already hard enough for students to get a legitimate loan without the worries of debt. Any increase would exacerbate the situations of myself and students all across the country,” said freshman Aaron Gurley.

Students like Gurley do not have to worry quite as much about getting private loans because of Friends University’s rather low default rate.

Pierce also stated that interest rates on private loans are determined largely based on alumni default rate. Friends has a lower default rate than public and technical schools, and also a lower default rate than the Kansas and national average.

The University also gives out about $6 million a year in scholarships to offset the cost of tuition.

The average debt of a Friends student at graduation is about $17,500 and the national average is closer to $22,000 dollars, Pierce said. 

The bottom line is that private loans could become more expensive, but the money will continue to be there. Low default rates are a huge ally for Friends University students.