Student Loans and the Financial Crisis


With the financial crisis nowhere in sight to get better would eventually hurt or jeopardize how you can borrow money for your education. Student loans from some sectors would feel the effects of this global financial crisis. With the ongoing finance and economic crisis and the Federal Reserve pumping out billions or probably trillions of dollars into Wall Street, it is bound to affect student loans and how you can borrow money for your education. The financial sector was hit the hardest since the mortgage collapse and money going in or out of these financial institutions is out of the normal.The crisis or the recession started with the housing and mortgage collapse leaving many people to file for foreclosures and bad mortgage loans. You really do not need to be a rocket scientist to know that the effects are paramount and gargantuan in scope. It affects the entire world. And to avert further crisis and get the big finance companies afloat the federal reserve infused an initial seven hundred billion dollars to stave off a nose diving economy. The US government address the crisis by enacting a bail out for the troubled banks and finance companies.Because these banks are the issuer of most of these student loans it may have some ramifications. The banks that are in trouble are the ones doling out these student and educational loans to students. So there is the potential that this could affect how you can obtain student loans for your books and tuition fees. But luckily for some, there is good news as the Stafford Loans under this program will not be affected because it is guaranteed by the governments education department. This is welcome news as most people and parents who wanted to borrow money for their children to go to college will not be affected.But some other forms of educational borrowing may get affected as these banks are having more stringent policies on who can apply and qualify. One case in point is those foreign students who may have a hard time with their budget and cash flows. The rising cost of fuel and food make it harder for foreigners to cope money wise.In some parts of the world the financial crisis does have some effects on student loans. For instance, in Canada they have a program called CanHelp which is a financial aid group that helps Canadians who would like to obtain college loan. The problem with CanHelp is that it is backed by the troubled bank Wachovia Corporation from North Carolina. This bank was eventually taken by Wells Fargo. Needless to say the funds that was flowing to this program suddenly stops. So you can see that this financial crisis has effects on student loans.On the brighter side of things, the US congress enacted the Ensuring Continued Access to Student Loans Act of 2008. This will effectively protect many families to have access to federal student loans during this economic and financial chaos. This would make all these families and students seeking educational financing more at ease. It also means that you can have access to federal loans without worrying about any impediments and hassles. You have to be aware though that federal loans like Perkins, Stafford and PLUS loans are capped so you need some borrowings from private lenders.