Stephanie Squire has a plan.
The recent Dubuque Wahlert High School graduate is enrolled in Kirkwood Community College's two-year business marketing program, set to start this fall.
From there, she hopes to go on to a four-year institution or cosmetology school, where she could work while attending classes.
Her dream is to own her own salon someday.
It's a practical plan coupled with a prudent approach, but Squire almost needed her business degree ahead of time to figure out how to finance her college education.
"It was really, really tough trying to find things without a cosigner. I had to do a lot of searching to find (a loan) that worked," Squire said.
The 18-year-old had a sinking feeling when she got her Free Application for Federal Student Aid (FAFSA) application back with not nearly enough assistance to cover her tuition costs. She immediately began the scramble to get the loans she needed.
Although Squire was successful, the process took several months.
Finding a private loan to cover college costs is becoming
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| For more information, contact the Iowa College Planning Center at 877-272-4692. The group is an independent organization of former financial aid officers assembled by Iowa Student Loan, a non-profit organization. |
"It's not just the subprime mortgages but all types of consumer loans; it's a whole economic crisis that's affecting student loans," said Steve McCullough, chief executive officer of Iowa Student Loan.
"Investors just are not investing anymore," he said.
Because many college loan providers depend on those investors, the availability of private student loans has declined -- there's simply less money available and fewer low interest rates.
"There are some large banks that are willing to make these loans, but only to people who have a cosigner. The requirements for credit and the amount people are going to be charged have both increased," McCullough said.
The federal government this year added another $2,000 in individual unsubsidized Stafford loans that students are eligible for, but the funding boost could be offset by the rapidly rising cost of college. McCullough said the majority of students need some kind of private loan to top off what they're getting in federal aid.
At Loras College, where, like many private schools tuition far exceeds what is available in government loans, there are a variety of financial aid packages to assist families to try to buffer the cost impact, said Julie Dunn, Loras' director of financial planning.
It's a critical feature, especially in the current financial environment.
Dunn said Loras starts going over finances with families early because of the private loan crunch, the constant changes in the loan scene and a complex array of options to consider.
"It's confusing and we are on the phone a lot these days with families trying to sort things out," she said.
But Dunn said she hasn't noticed an influx of students turning down Loras because of an inability to obtain private loans and she hopes there will be some more federal assistance forthcoming.
McCullough emphasizes that filing for FAFSA remains the gateway for all other loans. Interest on most government loans is in the 6-percent range and is fixed, but some of the private loans most students need are running as high as 11 percent for low credit scores.
McCullough said when using a source such as www.simpletuition.com to research loans from the primary lenders, to cautiously interpret the teaser interest rates.
In Iowa, McCullough said a group of lenders in the state have banded together to make up any shortfall this fall.
The 17 institutions have so far pooled $20 million to be administered through area colleges and Iowa Student Loan is hoping more local banks and credit unions will step forward to provide some assistance.
It's a situation that has made it more critical than ever to borrow as little as possible. McCullough said the average graduate from a four-year public institution in Iowa is carrying more than $20,000 in government guaranteed student loans.
"If there's anything we can tell students it's avoid credit card debt at all costs," McCullough said. "The average college senior graduates with $2,500 in credit card debt.
Starting early in the financial aid hunt also is crucial, beginning with financial aid information sessions at high schools.
The Illinois Student Assistance Commission turned away 50,000 eligible students last year because of the lack of funds. Appropriations haven't increased, but college costs and the number of eligible students have. Funding was ended in July this year and more students were expected to be turned away, according to Sue Kleemann, the commission's director of research and planning.
The financial pressure on students and their families combined with brain drain -- the exodus of Iowa's college graduates -- is what makes scholarship contributions of individual businesses like The McGraw-Hill Companies' essential in Dan McDonald's mind.
Two area high school seniors recently received $10,000 scholarships from the media services conglomerate.
As for Squire, she said she learned she needed to build her credit score -- and fast. She began applying her car payment and cell phone bill to boost her score, the building block of personal finance. She visited banks, sought help from her personal banker and researched online in her quest to finance her education.
"The whole process, it takes forever. I'm still finalizing things," Squire said.
She ended up obtaining a loan for $10,000 and plans to pay the interest while she's in school and start taking on full payments after school. When all is said and done, Squire expects it will take between five and 10 years to pay off her debt.
Squire admits she might have given up were she not determined that college is the route she wants to follow.
"I feel like in today's society you kind of have to go to college to get a good job and have a family," she said.
Student Loans - Stephanie Squire talks to us about her experience with trying to get student loans for college.
