Despite some panicky reporting to the contrary, the fact of the matter is that Stafford Loans are not in danger. The subject has gotten a lot of press recently due to the sub-prime mortgage crisis, the effects of which have finally trickled down to the arena of student loans.

There will, however, be some problems for student loans in the future, but these problems will be almost entirely limited to private school loans for some high risk borrowers. Students attending schools with reputations that have not yet been established will find that their loans might be at risk in the future as well.

The important thing to remember about this topic is that if an actual crisis arises which affects the availability of Stafford Loans, the federal government can take steps to make sure that the capital still is available. Nevertheless, poorly researched reporting has resulted in widespread fear about the future accessibility of Stafford Loans, and there is a lot of fear, if not panic, starting to go around. The ramifications of this unfounded fear could be many, which is why it’s so important to inform students about what’s actually going on.

One danger is that quick, unhelpful policy changes could take place in an effort to “fix” a problem which does not yet exist. The bigger danger is that students could start to believe that they will have no chance of securing a student loan, so they won’t even try. Remember – there are thousands and thousands of different Stafford Federal Family Education Loan lenders in addition to the Department of Education’s Direct Loan program — and Stafford Loans don’t require a credit check! Your regular, every day banks are still providing Stafford Loans, and some of them have even recently decided to lower interest rates on both federal and private loans. They would not do that if they were seriously worried about their ability to raise capital for the loans. Most big banks and schools are not worried about Stafford Loan availability – so neither should students.

Tags: Financial Aid