What have you always wondered about the economy? Tell Us

Tough econ lesson for college students

Stacey Vanek Smith Aug 23, 2007
HTML EMBED:
COPY
Students at the Massachusetts Institute of Technology William B. Plowman / Getty Images

Tough econ lesson for college students

Stacey Vanek Smith Aug 23, 2007
Students at the Massachusetts Institute of Technology William B. Plowman / Getty Images
HTML EMBED:
COPY

TEXT OF STORY

Scott Jagow: We’ve talked so much about how difficult is for people to get home loans right now. Lenders have jacked up their rates and they’ve gotten a whole lot pickier about who they lend their money to. But it isn’t just the mortgage market, it’s also the whole lending industry a€¦ And it couldn’t have come at a worse time for college freshmen, as Stacey Vanek-Smith has more.


Stacey Vanek-Smith: Here’s a timely economics lesson: When lenders have trouble getting their hands on cash, loans become harder to get.

That lesson is playing out in the economy right now. Chris Low is an economist with FTN financial. He says one part of the lending market has been hit especially hard.

Chris Low: What we’re seeing now is a bifurcated market where any loan that has government guarantee behind it, you can still get a decent rate, but other borrowers are not so lucky.

That is, people taking out private loans. And with federal aid stagnating and tuition skyrocketing, the market for private student loans has grown more than 900 percent in the last decade.

Low says rates for private loans like these have jumped as much as 2.5 percent in the last month. For college freshman, that could mean a difference of $1,000 a year in loan payments.

I’m Stacey Vanek-Smith for Marketplace.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.