In the wake of recent buzz about a slowing economy and collapsing lending market, university officials said students should not worry about receiving financial aid for the upcoming academic year.
The majority of UC students, including those at UCLA, receive the lion’s share of their financial aid, such as CalGrants and Pell Grants, from federal funds, said Nancy Coolidge, a coordinator for the University of California Office of the President.
As such, the majority of students applying for loans will not be affected by the changes in the current lending market.
“At UCLA there should be no shortage of loan availability. That’s the big message (and) it’s a reassuring message. … You should have no problem,” Coolidge said.
Coolidge said even those students seeking private loans don’t have too much cause for concern. Because they graduate from a reputable university, lenders rarely see UCLA students as high-risk loan candidates, Coolidge said.
Unlike other types of loans, education loans are considered non-dischargeable under the law ““ borrowers still have to pay off their student loans even if they file for bankruptcy.
Students attending low-caliber universities, generally characterized by low admission standards and poor academic preparation for the job market, are considered high-risk candidates because lenders can’t be sure they will get the kinds of jobs that will allow them to pay off their loans, Coolidge said.
But because such students would still be held accountable for their loans regardless of their financial situation, private lenders have not been concerned with the associated risks, Coolidge said.
Recently, as the credit market is beginning to shut down, caused in part by the changing behavior of foreign investors, lenders are becoming more conservative about giving loans to high-risk students, Coolidge said.
While creditors are tightening their lending standards, students’ overall credit scores and their credentials help determine if they will be getting loans, said Jennifer Langan, a spokeswoman for Wells Fargo Bank.
“Wells Fargo will continue to provide private student loans for qualified customers. … And customers can be sure our lending prices and practices continue to be based on the credit-worthiness of each customer,” Langan said.
Coolidge said private lenders don’t consider UCLA students to be risky investments and consider UCLA to be a high-caliber university because UCLA students tend to do well professionally.
Students seem to be catching on.
Aditi Chatterjee, a third-year political science student, said though she does not have much experience with financial aid, she isn’t too concerned about getting private loans for her law school education.
Set to graduate this spring, Chatterjee will be enrolling in the fall.
“I’m going to a reputable law school from a good school, and I’ll probably be in the corporate market right after. I think I should be able to get loans,” she said.