Several loan companies have lost Ohio University's stamp of approval after they discontinued their private loan programs, dropping 445 total students.
Students who opt for a private loan that doesn't go through the university are advised to go through certain banks, but some of those lenders have backed out of the private loan business, resulting in removal from OU's financial aid Web site.
Among those that have pulled the plug on private loans is KeyBank, which stopped accepting private loan applications Friday and will pay out current loans until the end of their terms ' leaving 332 students to find a new lender. Education Finance Partners and CampusDoor, an institution backed by the Lehman Brothers, also have exited the private loan business.
Laura Mimura, a spokeswoman for KeyBank, said exiting the market was a national decision, and the bank still participates in other student finance programs, such as federal Stafford and PLUS loans.
We also recognize that we won't leave students high and dry for the year
she said. We are committed to this business and committed to education affordability.
KeyBank followed 135 other companies since August that have shed private loans because of an unfavorable credit market and the need to focus on simply staying afloat, she said.
Federal loans can have a six-month grace period after graduation, similar to private ones, but repayment can also start as early as 60 days after the final disbursement. Federal loans also have caps on interest or fixed rates, while private lenders vary their rates based on the market, as well as the borrower's credit history.
CampusDoor disburses money for loans every quarter, and normally students who receive funding would be expecting their next disbursement in March. But with the bankruptcy of its backer, the company will issue the last amount to 101 affected students in January. - 17
Archives
Jessica Blakely
