Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am here with Jane Clark, the Education Editor of Kiplinger's Personal Finance Magazine, to talk about student loans. Jane, I understand the subprime mess and the credit crisis on Wall Street has bubbled over even in the student loan business. Are students can have trouble getting federally back Stafford Loans this year?
Jane Clark: Look, the federal government is not going to let millions of students go without their college education for lack of the student loans. It is true that some big lenders have dropped out but there are still plenty of lenders that are giving these loans and as you know, the federal government sets these rates, that's not going to change.
Kevin McCormally: What about private loans to make up the difference between what the feds will actually lend you and how much you need for college?
Jane Clark: They are going to be harder to get and they are going to be more expensive.
Kevin McCormally: How do students get that money?
Jane Clark: If their school participates in the Federal Direct Loan Program, they can get that money directly from the school.
Kevin McCormally: And if their school doesn't participate in that program?
Jane Clark: Then they have to look for a private lender and they can do that by going to kiplinger.com and looking at the lender comparison tool.
Kevin McCormally: That's great. Now, what about the private loans?
Jane Clark: Those will require tougher credit requirements and they also will be exacting higher interest rates. So, you can expect to have to have a higher credit score and pay more. If you don't have a good credit rating then you are going to need a creditworthy co-signer.
Kevin McCormally: But you should always go for the federally back loans first.
Jane Clark: Right, those are the best deals anyway and you can find one by asking for suggestions from the Financial Aid Office or by going to kiplinger.com and looking at that lender comparison tool.
Kevin McCormally: Thank you, Jane.
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