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Kai Ryssdal: Tight credit on Wall Street’s one thing. It’s entirely another when it starts to hit consumers where it hurts.
College students in Massachusetts might wish they had more time before classes start this fall so they can find the money to pay tuition.
A major non-profit lender in the Bay State has announced it’s not going to be able to make student loans this fall. That’s sending 40,000 families scrambling to find other options.
From WBUR in Boston, Kurt Nickish reports.
Curt Nickisch: The Massachusetts Educational Financing Authority is a state-run lender that relies on credit markets for funds. Last year, it issued more than a half billion dollars in student loans. But this year, Director Tom Graf says he couldn’t wrangle financing and finally had to break the bad news to parents.
Tom Graf: Yeah, a lot of schools, they need to satisfy their bills in late July and early August.
That’s like… today. Jim Tilbe, a pastor from Raynham, Massachusetts, had been counting on the low-cost loans for his two college-bound kids.
Jim Tilbe: I didn’t really think it was going to be a problem, so I didn’t have a lot of anxiety about it until today when I heard the news. It’s there now.
Now Tilbe’s applying to the federal government and private banks. The loan terms won’t be as good, but those institutions at least have their own money and don’t have to rely as much on credit markets.
Still, Tufts University Financial Aid Director Pat Reilly’s afraid the last-minute scramble will lead to some bad decisions.
Pat Reilly: If you watch MTV at 2 o’clock in the morning, there’s a lot of ads for student loans.
Students won’t exactly be able to get their money for nothing there — those loans often have terrible terms. A lot of kids are now getting a real education before they even set foot on campus.
In Boston, I’m Curt Nickisch for Marketplace.