College students facing loan crisis
Cathy Ezepik’s son, Chris, borrowed roughly $3,000 from the Massachusetts Educational Financing Authority to help pay for college last year, but the Whitman family is not banking on getting that money this fall.
Ezepik said her son, who will begin his sophomore year at Stonehill College next month, is saving money earned through his summer job.
“He does work and he tries to save every penny he can,” she said. “But that’s a summer job and if this loan is cut out and he uses all his money, then what will be left for next year?”
An estimated 40,000 students and families will not be getting loans from the state lending authority this year.
The authority, which provided more than $500 million worth of college financing last year, said Monday it will not be able to offer the bulk of its loans this year because of turmoil in the financial markets.
The authority had said in April it could not support student applications for the federally backed Stafford Loan program. MEFA offered “borrower benefits” that made the loans less expensive than those obtained from private banks.
“As a result of our problems and the continued dislocation of the capital markets, we have been unable to raise funds for the coming academic year,” Executive Director Thomas Graf said.
The news arrived as many local students are preparing to pay their tuition bills for the fall semester.
“It’s rough. I mean, what are they going to do now?” Mike Stewart, 18, of Easton, said about college students who rely on assistance from the state lending authority.
Stewart, who will attend the University of Massachusetts at Amherst in the fall, said he is looking to federal loans and working as a bartender to get him through college.
MEFA is encouraging students and their families to seek federal loans on their own and then private loans through banking institutions.
Meanwhile, financial aid officials at local colleges say they have been busy directing local students to other lending sources.
“They do have choices, just not MEFA,” said Janet Gumbris, director of financial aid for Bridgewater State College.
Last year, 400 Bridgewater State College students applied for a loan through MEFA, roughly one-third of all students who applied for an alternative loan, Gumbris said.
The college is providing students with at least seven choices of comparable lenders, she said.
In Easton, Stonehill College sent out letters to students and their families in April to alert them of a possible money issue in the private loan market, said Eileen O’Leary, assistant vice president and director of student financial services.
“What we told families was that a better option even to private borrowing, even if there wasn’t a crisis, is the federal parent loan program,” O’Leary said.
The Federal PLUS Loan Program helps parents and guardians with good credit borrow up to the cost of education for undergraduate children, according to its Web site.
“Because it’s the federal program the money is guaranteed,” O’Leary said.
For students who can’t get enough funding for their undergraduate education, they may need to switch to a community college temporarily, O’Leary said.
At Massasoit Community College in Brockton, spokesman Richard Cronin said the college is anticipating seeing more students “who had planned to go to other institutions, but now cannot attend those schools because of the lack of availability of funds.
“We’re anticipating that pool will grow higher,” he said.
The community college is significantly lower in cost and can save students who live locally on transportation costs, Cronin said.
In most cases, students can transfer college credits to other educational institutions, he said.
Maria Papadopoulos can be reached at email@example.com.