Financial Aid Memo Re: Student Loans

Wednesday, March 19, 2008
SNHU Communications Office

MEMO
To
: The Campus Community
From: Financial Aid
Subject: Tightening of financial markets and student loans

Dear SNHU Community,

You may have seen articles and news stories about how recent difficulties in financial markets and with sub-prime mortgages may affect the availability of student loans for next year. We want to assure you that SNHU has been following this issue closely. While some lenders have announced that some programs may be cut back or even suspended, we are very confident that there will still be federal and private loans available in the marketplace throughout next year.

Federal Loans:  Stafford, PLUS, Grad PLUS and Perkins loans still will be available and are backed by federal guarantees to lenders that fund these loans. While it is true that some lenders have announced that they are suspending these programs, less than 1 percent of the more than 2,000 lenders nationwide currently are doing this. We have received assurances from all of our large-volume lenders that they will have funding for these loans. Secretary of Education Margaret Spellings has also indicated to us that there have been no instances of students unable to obtain a federal loan due to current market conditions or the unavailability of funds, and federal officials do not expect this to begin happening. If conditions worsen, there are several fallback provisions in the law that will ensure the continued access to these programs.  Our data shows that most of our students can complete their educational financial obligations using only these federal loan programs.

Alternative/private loans:  Some lenders have announced temporary suspensions of their non-federally backed loan products due to bank-to-bank funding concerns created by the sub-prime mortgage crisis that have made lending dollars for these programs more expensive to obtain, thus reducing the profitability of these loans for those lenders. We expect that some others will also do so, and that the credit requirements and interest rates on nearly all alternative loans generally will become less favorable to borrowers.

We recently have analyzed the situations of our students who have alternative loan products (such as the recently suspended LEAF loan program, Signature loans, CitiAssist loans and several others) and are preparing to help them and their families make the best loan choices they can for next year. One thing that we found is that the great majority of students who take these loans have not taken advantage of the Federal Parent PLUS loan program before looking to alternative loans. The PLUS loan is more favorable than alternative loan products because they have lower interest rates and many borrower protection provisions that the alternative loan programs do not. The PLUS loan program has interest caps lower than any of the alternative loans, and fees charged are smaller than fees for most alternative loan programs. We have always encouraged students and families to pursue PLUS loans prior to looking at alternative loans, although many have chosen not to do so in recent years for various reasons.

Because it is likely that alternative loans will become even less attractive financially to borrowers this year, we will encourage students and families to take advantage of the PLUS program prior to looking at any alternative loan sources. We realize that some may not pass the eligibility criteria for a PLUS loan, which is based on credit histories, and that parents of officially “independent” students are not eligible to borrow through the PLUS loan program. While some still may need to pursue alternative loan options, we will urge families to look at all federal program options first.

As with any concerns of this nature, we felt it was necessary and important for us to reach out to our students and families. The Office of Financial Aid staff is here and, as always, ready to assist anyone who has questions or needs guidance in obtaining loans for next year.

Choosing a lender is a very important personal decision and by law, financial aid staff cannot make this decision for any student or family. SNHU is happy to certify an educational loan from any provider. Details for loan options may be obtained by viewing our Educational Loan information. Additional loan information may also be found online at (StudentLoanListings.com).

We are looking forward to the 2008-2009 academic year. Happy spring!

Sincerely,

Louisa M. Martin, Director
Office of Financial Aid
Phone: 603.645.9645
Email: finaid@snhu.edu

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