In what could be a scary omen of financial troubles students nationwide will face in 2009, more than 180 George Washington University students are searching for emergency funding mid-year after National Education, a lending company, could not obtain funding for loans it promised, the GW Hatchet reports.
The company is one of around 200 that have been affected by the frozen credit market and have stopped processing Stafford loans "due to difficulty in obtaining financing from the capital market," according to an E-mail to students from the school's financial aid office.
"They had been telling us since July that they had funding, and we were under the understanding that they just needed a signature," said Dan Small, the executive director of financial assistance. "But we were told on Friday that the issues in the credit market prevented them from securing funding. It is a problem because some students depend on funding not only for tuition but for living expenses as well."
The university will not penalize affected students for their missing Stafford loans and also will not charge any late fees. The school is also now turning to the federal government to offer direct lending, bypassing private lenders. The application process may take months and would certainly lead to long hours for the university staff (although students would mostly be shielded from the legwork).
"With the way things are going, direct lending might be a good option," Robert Chernak, senior vice president for Student and Academic Support Services, said. "There were times where there were advantages to dealing with private lenders, but they might not be there anymore."