Answering the lack of Federal Funding
Congress is now entertaining the idea of taking action to support federal loan availability. It is an effort to counteract the private lending institutions that will no longer offer federally backed student loans; Education Secretary Margaret Spellings would be allowed to cover a limited number of loans that have not been granted by a financial firm for the coming school year. However, if there are any net costs associated with this assistance, it will not be granted.
There are many stories suggesting the lack of available federal loans for college students this coming school year. The reality is that there will be plenty of funding, but the private sector still seems a bit shaky. Private loan offerings are estimated to be significantly lower in the coming year. One state has its own solution in the works for the problem.
The Arkansas Department of Finance plans to extend a loan to the student loan authority that is needed due to the recessional state of the economy. The amount of $80 million is in the works to provide encouragement for students to continue attending college, or apply as continuing students despite reports limited funds being available.
The state loan authority, Tony Williams, has made it clear that the need is strictly for the student loans for the coming school years, and not to be used for operating the company itself. The request was made without the clarifying information about whether or not the company would continue make loans available if the money from the government is not forthcoming.
This request is for $10 million more than the entire amount of new loans the authority issued for the entire 2007 year. They claim to need the large amount in order for students to continue to secure loans. Otherwise, according to the executive director, banks will no longer offer such loans. They will shy away, citing not enough liquidity in the market to support such risk.
It remains to be seen if this is going to be a legitimate solution. Not every state will have the money available to “bail out” the loan companies that are struggling. The Federal Government is even limiting the assistance it will offer. These alarming issues are turning away more and more students every day from applying for loans.
Yet the fact is, if the student is given enough outlets for funding, they will be able to pay for college. Even single mothers are able to coordinate care for their children, jobs, and college educations. They find the funding they need, be it from their school or their state benefits.
Lack of funding is not a reason to bypass a higher education. The Arkansas government realizes the need to continue the rise in college attendance figures. They are investing in the future of their citizens. Hopefully there will be other states beginning to follow suit and keep the rate of students attending college increasing by continuing to make affordable loans available. Especially since the only other assistance the federal government is offering is in the form of raising the amount of money students can borrow by $2000. This is unfortunately a mere drop in the bucket for many college hopefuls.