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.