Student Loans: Should Messiah Students Worry?

While recent news of modest economic growth show that we are not, in fact, in the midst of a recession, especially since the definition of a recession is two quarters of negative growth and we have yet to see one, it is still undeniable that we are experiencing an economic downturn that nobody likes. This downturn has produced noticeable and, in some cases, dramatic effects on most aspects of the economy including the student loan industry that most college students depend quite heavily on. A recent letter to students and parents from the Office of Financial Aid which sums up the situation, stating that:
"Many of you might have recently heard alarming reports in the media about disruptions in the credit markets affecting student loans, announcements from some student loan providers that they will no longer participate in some or all of the student loan programs, and dire predictions that there will not be enough student loan money available this coming fall."
The media reports and the letter from financial aid have left many students wondering what the cause of all these problems are. It seems that the economic troubles the nation is experiencing have had an adverse effect on the ability of some private lenders to be able to borrow capital in order to finance new student loans. In turn, some smaller lenders have had to drop out of the student loan industry all together.
Furthermore, the downturn isn't the only problem driving all of this. The other major factor is that Congress recently passed a law that considerably cut the amount of each payment made to lenders who participate in the Stafford and PLUS Loan programs, which in turn made many of those lenders simply drop out of those programs.
The kinds of problems that the Financial Aid office and the media at large are reporting have gone mostly unnoticed by the many Messiah students. Most said that they had no knowledge of the student loan problems prior to the letter they received from the Financial Aid office. However, there were a couple of students that seemed to be at least marginally concerned about the situation.
One of those students is sophomore Kate Beiler who said, "I do worry about it because of how much Messiah costs and being a part of just an average income family." Beiler is not alone in her reliance on financial aid; 97% of Messiah students receive some form of financial aid.
The letter sent out by Financial Aid in an attempt to alleviate students' anxieties "kind of helped," according to Beiler, yet for other students, the letter is the reason they are not worried about their loans.
So how can Financial Aid be so sure Messiah won't be affected by the problems with student loans? The government-affiliated lenders Messiah deals with are large enough that they are not being affected by the economic troubles, and if one of the federal loan programs (either FFELP or Direct Loans) were to experience serious problems, the College would be able to use the other in order to help the remaining students. As for the private lenders Messiah contracts with, they are only avoiding colleges whose students present a high risk of defaulting on their loans, an area where Messiah students have no problem.