Question: economy and student loans?

[javasaurus]

Does anyone know how the economic downturn and lack of banks' lending ability has affected student loans? Will fewer people be getting an education in the coming year because of this?

Comments

[acroyear70.livejournal.com]

it has started a bit already. federally guaranteed loans are still there and good, but if you don't quite qualify for those (there is a really tight layer where people make to little to afford but too much to qualify for protected aid) and need a more general loan, it may be harder to get on a poor credit rating.

really the biggest problem today has been the 520s that have lost most of their value. these are tax-free investments like a traditional IRA (taxed going in so no tax on the capital gains). they're relatively new so they haven't hit a lot of people, but it ain't exactly helping to sell the things either.

[javasaurus.livejournal.com]

It's almost impossible to understand the degree to which our country runs on loans, debt, and credit.

[acroyear70.livejournal.com]

Well, blame the Italians...

...and the Czechs...

...and the Dutch...(mostly)

...and the British...

...and, well...

The current "crisis" is that the whole system is designed to optimize getting loans, paying them, getting the goods, selling the goods for the profit, and then paying back the loan plus interest (profit for the original loaner), all without having to actually have the original loan in hand. The whole thing happens in a day or two.

that finale in Trading Places, where they were selling in a manner that got the demand up and price to rise, then buying them all back as the prices dropped, raking in the profits? that happens *daily*, and at no point did the two of them actually have the money to buy them in the first place. they didn't need to. the short-term loan system, the one that the feds control the rates for in those monthly meetings, handle it all.

and when THOSE companies can't come up with the cash, or in the current crunch, *won't*, then there's a problem. AIG and others were basically hoarding what they had, the very companies that were supposed to be handing out the cash to cover the profits that backed the whole damn thing simply stopped lending out the money, rates be damned. this is because the profits that THEY were basing their ability to make those loans on were all tied up in the mortgage trading shell game of mutually insured credit swaps, were what collapsed.

bubbles work that way - at every level, these layers of loans built upon loans all working on the idea of ever-increasing prices. the system was meant to process its way out over the course of months, but computers make it so fast and easy that such layered loans were building up in days, sometimes just hours, all preprogrammed to follow the statistics of a stable structure.

when the housing market collapsed, it took all that down with it.

the problem is the banks aren't (or at least weren't) using the fed-induced money as intended. the point was to get the big companies like AIG to start shelling it out down the layers to get positive-direction trading going again, but there are so many other uncertainties that those who do have cash are hoarding it and aren't interested in the money the short-term loaners like AIG have been given.

this is what happens when one bubble bumps into another: the gas prices eliminating everybody's discretionary spending cash, the constant stream of layoffs from mergers, all of this led to a lousy tourist season (unless you were from some other country riding on our weak dollar) and a christmas that promises to suck...so MORE closings and layoffs, and the spiral continues.

[blueeowyn.livejournal.com]

Fewer people will be getting an education (or being more in debt) for a number of reasons.
1) The people who had funds in an educational trust for kids who are going to college now (or will in the next year or so) are screwed.
2) Because of an increase in default on student loans (going back a few years), there is less money in the student loan arena thus fewer loans
3) Because of stricter regulations on giving student loans, fewer people will qualify for them
4) Because of the bad economy, sales are down and states are having budget troubles which means cuts for Higher Education ... which increases tuition and decreases access
5) Because of shipping charge increases (because of the gas prices); textbooks and other normal things are going up (which again affects everyone but really can hit a marginally financed college student)
6) Because of cuts, there may be fewer jobs available ...
7) Scholarship money from endowments is also likely to be affected by the collapse