Students at St. Matthews University are turning to a new lender after more than half of them lost access to student loans in recent semesters as two major lending institutions succumbed to the international credit crunch.
Some 800 of the university’s 1,400 medical and veterinary students had been getting from two organisations – The Education Resource Institute, known as TERI, and Health Xpress, according to university chancellor John Marvin.
Medical student Liz Kiselak, 25, said she did not realise until two weeks ago that the loan for which she had applied through TERI to cover her over next semester was not going to be forthcoming.
“It’s very hard when you’re trying to study to have to worry about how you’re going to pay for the next semester,” she said.
She said almost all the American students she knew at the university were in the same situation.
“I knew TERI was not taking any new applications, but I didn’t realise they were bankrupt and would not be paying out on loans that had already been applied for,” Ms Kidelak, from New York, said.
She is now applying for a loan through Ed-Invest.
“There’s no way we have access to federal loans because we’re not going to a university in the States. That’s not an option for us. Now we’ve got only one choice,” she said.
TERI, the largest not-for-profit guarantor of US private education loans filed for bankruptcy in April. That same month, Health Xpress stopped processing applications for new loans.
‘Because of the problem in the credit market, several of the loan programmes that had been available were cancelled, not just at St. Matthews’s but at all schools that did business with them,’ he said.
The university supplied students in need with funding in a tuition assistance plan until another financial institution, Ed-Invest, was found to supply loans to students in the coming semester, Mr. Marvin said.
To ensure its student could pay tuition fees and continue at the university, St. Matthew’s organised an in-house loan scheme backed by its investors.
‘The markets were quite unforgiving; there was nothing available in the market place for students. So, we as a school created a tuition assistance plan for students with need of financial aid. We helped them out. With that programme, we were able to retain a lot of students who might otherwise have had to take the semester off,’ he said.
He said he was not aware of any students who had been forced to leave school temporarily due to financial constraints. He admitted some students who had lost access to loans were turned down for the university’s tuition assistance plan because they had not shown prior need, but said ‘virtually all were able to get the resources together for this semester’.
‘It has been very nerve-wracking for the students and for us,’ Mr. Marvin said.
Ed-Invest specialises in providing loan programmes for non US-based medical schools and has been operating since 1992.
‘We were able to link up with a programme that students are just now about to apply to,’ Mr. Marvin said, adding that cash-flow problems for students had not seemed to affect enrolment, which he said was slightly higher than it had been a year ago.