LASTRAPES

Bailout affects private student loans

By: MAY ADVINCULA For The Red & Black

Posted: 10/8/08

What does a $700 billion bailout mean to a University student?

Probably not much, since economic jargon isn't taught as a second language in many public schools.

But the current financial crisis and battered job market is leading some to believe that no one is safe, including college graduates.

"The students most at risk [due to the financial crisis] are the students thinking about going into the job market," said Bill Lastrapes, an economics professor in the Terry College of Business.

Lastrapes said the employment prospects are not very good for the class of 2009, but he said students should "take a longer run view of situation."

In the long run things will be fine, he said, but in the short run bad economic times are here to stay.

With a slowing economy also comes the difficulty of borrowing money, which can make it harder to get student loans.

Existing student loans will not be affected by the current financial situation, said Tim Connell, president of the Georgia Student Finance Commission.

But private loans, which are not state or federally sponsored, will be, he said.

However, students will still be able to get their hands on cash for college, due in part to the Ensuring Continued Access to Student Loans Act, which Congress passed in May. This legislation, which was extended till 2010, says that the Department of Education can be a source of loan money for lenders.

Federal grant money from the Department of Education is disbursed through the Federal Direct Program, in which the University participates.

"This is a time where [students] should be educating themselves on how the market works," said Joan Koonce, an associate professor and financial management specialist.