Medliorate

Improving medical students

Funding Medical School – Loan Crisis

Posted by medliorator on March 12, 2008

Paying for medical school could get tougher.

The credit crunch is hitting the college classroom.

 

Borrowers will have a more limited choice of lenders and find discounts for on-time payments or direct debit scarce. On top of that, they’ll see higher rates and fees.

 

The credit crisis, which started last year with mortgages and has bled into many other areas, is now affecting student loans. Many lenders, particularly smaller companies not affiliated with banks, are finding their main source of funding for private student loans cut off as investors balk at buying securities backed by these loans. This will force some to boost interest rates on private loans by up to 1 percentage point, raise minimum credit scores to 650 and require parents to co-sign the loans, experts said.

 

While the interest rates on federal loans are set annually by the government, many lenders will stop waiving origination fees and cut out the discounts offered borrowers after they start repaying the loan, boosting the overall cost.

Loan crisis goes to college [CNN Money]

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