ERIC Number: EJ794728
Record Type: Journal
Publication Date: 2008-May-1
Reference Count: 0
On the Losing End
Nealy, Michelle J.
Diverse: Issues in Higher Education, v25 n6 p11-12 May 2008
How well a particular industry fares during any given time has an impact on countless other industries and consumers. Case in point--rising gas prices are affecting everything from airfares to the price of getting a pizza delivered. This article describes a similar situation that is happening with the wave of home foreclosures as the subprime mortgage crisis has fueled an impending calamity on the student loan industry. Minority borrowers, like minority homeowners, stand to emerge as the biggest losers. Disproportionately targeted by predatory lenders, minority communities have been affected disproportionately. Despite similar credit scores and income levels, Black and Hispanic borrowers were more than three times as likely to acquire high-interest loans than White borrowers in cities such as Boston, Chicago, and Los Angeles just to name a few, even though the majority of subprime borrowers would have qualified for a conventional prime rate loan, according to a report from the Center for Responsible Lending (CRL). Just as potential homebuyers and sellers are feeling the squeeze of the credit crunch, students across the nation will soon begin to feel the squeeze as banks and other student loan lenders either stop lending altogether or raise their costs and reduce their benefits. Sallie Mae, the largest student loan provider in the country, said it is tightening credit requirements for borrowers and pulling out of offering loans to students attending institutions with low graduation rates, some for-profit career schools and community colleges--the types of institutions that minorities attend in significant numbers. Beginning in May, the company will charge fees ranging from $35 for freshmen to a few hundred dollars for graduate students to apply for federal loans. Recently, the House Education and Labor Committee approved bipartisan legislation to ensure that the turmoil in the U.S. credit markets does not prevent students or parents from accessing the financial aid they need to pay for college. If enacted into law, the Ensuring Continued Access to Student Loans Act of 2008 would provide new protections to ensure that families continue to have timely, uninterrupted access to federal college loans.
Descriptors: Student Loan Programs, Minority Groups, Disproportionate Representation, Federal Programs, Credit (Finance), Financial Problems
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Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education
Authoring Institution: N/A