Business

Credit Crunch Reaches Student Loan Market

(WCCO) Many college students have now begun their fall semester. This year, some of those students may have a harder time getting the money they need to pay for school.

"I know tuition is going up slowly but surely every year. So, it gets tougher to pay for college," said University of Minnesota student Chance McMahon.

McMahon is a junior at the University of Minnesota and a philosophy major. When it comes to financial aid he has developed his own philosophy.

"(You) can't live without it. You need it to survive if you want to go to school. If you want to go to a good school you need financial aid," he said.

Most students at the U of M and other universities around the state get their financial aid through government-backed loans like the Stafford loan. A federal law passed this spring lowered the interest rate and fees on the Stafford loan, helping students like McMahon.

Students who need additional help will find fewer options this fall. Some private lenders, most notably TCF Bank, have backed out of the student loan market.

Financial experts say a sluggish economy is the reason more banks are backing off. It's making it harder for students who need extra help, but that doesn't mean they can't get it.

At Saint Cloud State, 70 percent of the student body will receive financial aid this fall. That's the same as last year. The difference is that they have to search a little harder to find it.

"Our experience with students heading into this fall semester is that they may have to choose a different lender but they are able to access both the federal programs, the state loan programs and alternative loan programs if that is their need," said Mike Uran from St. Cloud State University.

That's good news when your future depends on financial aid.

"I get somewhere around $20,000 a year. Definitely helps out with school here," said Andrea Doyle, another U of M student.

Financial aid experts said another resource for students are on-campus scholarships, which often go overlooked.

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