New York State Senator Charles Schumer called on the federal government to protect student loans outside Stuyvesant on Monday, October 6. He proposed a four-point plan to help ensure that families of New York City students get the loans they need to pay for college.
As a result of the current economic crisis and the tightening of credit markets, student loans will become harder to get and more expensive in the near future. Schumer’s plan involves encouraging all colleges to accept direct government loans, and assuring that government loans will still be available even if the private loan market collapses.
Schumer also sent a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke asking them to pay special attention to the student loan market.
“We need to build an impermeable wall around the student loan market to protect our kids from this financial crisis,” Schumer said in his speech. “If even one high school grad has to forgo college because they can’t get the loans they need to pay for it, it would be a great casualty of this economic crisis.”
Almost half of all public and private student-aid funding (around 60 billion dollars) comes from the federal student loan program. Students can either borrow money directly from the government or get loans from private lenders subsidized by the government. Due to the credit crisis, over 50 lenders have either suspended their student loan programs or left the guaranteed loan program. This has many students worrying about how they will pay for college.
Principal Stanley Teitel attended Schumer’s rally, and agreed with his ideas on the student loans. According to Teitel, the average cost of a private college is about 45,000 dollars a year and the average cost for a state college is about 25,000 dollars a year. Without loans, many students and their families will not be able to afford the costs of certain colleges.
“This could have a very detrimental effect on lower and middle-class students who rely on these loans in order to go to college,” Teitel said. “I just hope that the legislature can act quickly enough so that students are not closed out this year who might need the money.”
Schumer’s plan does not guarantee that students will get the loans they need, especially those applying to college this year.
“I’m obviously really worried. College prices are going up and the amount of help we’re getting is going down,” senior Tanya Kobzeva said.
Meanwhile, other students are not worried, and believe that they will have no problem paying for college. “I mean, everyone’s been talking about the financial crisis but for me, it hasn’t affected my life too much,” senior William Oh said.
Congress recently approved a measure that would allow students already on loans to continue on their loans and continue with their education no matter what the current difficulties in the private credit market. This measure will remain through the 2010 school year.
Teitel said that families need to think about college costs realistically, and always have a backup plan in mind if they are not able to get a good loan.
“Everyone’s going to have to have a realistic assessment of what financial means do we as a family have, and what do we really need in order to be able to allow you to go to the school you want,” Teitel said.