Locally, Student Loan Fallout Limited

Friday, August 15, 2008
Union Leader


The University of New Hampshire and other local colleges have reported limited fallout related to the collapse of the auction-rate securities market, a major vehicle for backing private student loans.

The schools report that many students have been able to secure funding through other sources, while an increase in the amount of money available through federal Stafford loans may have helped reduce the need for private borrowing.

"Lenders like the (New Hampshire Higher Education Loan Corp.) were very good about communicating out to their borrowers and to colleges and universities," said Mark Rubinstein, the University of New Hampshire's vice president for student and academic services. "That long lead time allowed us to help students who need that type of loan product to find alternatives."

Rubinstein said UNH acted quickly to alert students this spring about the situation. The school is the largest post-secondary educational institution in the state, with 12,500 undergraduates at its Durham and Manchester campuses. In Durham, tuition payments for fall term were due Aug. 7; for spring term, they are due Dec. 11.

"Our goal was to try and provide information to lessen the likelihood that students or their families would feel panic or uncertainty as to what their options would be," Rubinstein said.

"Our financial aid office has been communicating with students and families since the spring. At this point, we're not seeing the students we are working with have any trouble," Rubinstein said.

Although the number of UNH students with private loans has dropped about 10 percent over the year, Rubinstein said a $2,000 annual increase in the amount students could borrow under the federal Stafford loan program may have contributed to that.

Southern New Hampshire University in Manchester also reported little impact. Only a small number of students had been affected, the school said, and the school's financial aid office has been working with them to find additional aid.

Daniel Hebert, president of the New Hampshire Jump$tart Coalition, a financial-literacy advocate said many colleges and universities were too slow to respond to the collapse of the ARS market. He also said the events of the past few months have underscored the need for improving financial education.

"When the markets collapsed last February, NHHELCO was very quick to announce the suspension of its alternative loan program. Where was the outrage and concern at that time? Everyone just assumed that the pools of money would always be there," said Hebert.

"Now, with a few weeks before kids go back to college, families and students are scrambling to find out how they are going to pay the tuition bill. "It all circles back to the importance of financial education and individual responsibility. Parents and their kids have to be taught to look out for themselves in order to operate in today's complex financial environment."

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