Due to continuous inflation, banks and lending companies are beginning to tighten their standards for loan applications. This may be expected in an economic recession, but the effects brought about by these events are beginning to make a huge impact on American families nowadays, particularly to American parents who are sending their children to college.
American parents usually rely on loans to pay for their kids' college education. However, since lending companies and other student loan boards have started implementing stricter application processing and approval, this makes it more difficult for parents to provide for their children's college needs. Persons with good credit history are more likely to have their loans approved, but the irony is, those in good credit standing have less reason to apply for loans.
In a recent poll conducted by the New York Times/CBS News, nearly 70 percent of the American parents surveyed said that they are "very concerned" with the available options they can take to pay for their children's college education. Only about 6 percent of the parents surveyed were "not concerned" regarding the issue. In response, the Department of Education gave assurances about the availability of federal loans, but the department still has to work things out with for guarantors and lenders to ensure that funds would not run out. Private lending companies, meanwhile, are fast becoming a prime alternative source for loans, but they, too, have increased their lending requirements.
According to the American Student Loan Services, parents borrow an average of $10,000 to pay for their children's initial college needs each academic year. Tuition alone costs roughly about $6,000 in public colleges and around $23,750 in private institutions. Parents usually pay on an installment basis, but this makes only a slight difference, since they also have other educational needs to provide for, such as room and board, computer equipment, living allowance and other miscellaneous fees.