Rising tuitions always had an outlet, rising property values and second mortgages. But the property values stopped rising and the banks stopped giving second mortgages.
And the colleges are getting scared. Here is the president of the Student Financial Aid Administrator discussing the issue.
“With so many people up against the wall with declining home values,” said Philip Day, president of the National Association of Student Financial Aid Administrators, “the issue of using home-equity loans for tuition is almost rendered moot.”
So colleges and universities have been living off the housing boom and the rise in student lending, and now are facing lean times.
As the ancient curse said, may you live in interesting times.
But with home values having fallen off a cliff, many homeowners now find themselves underwater, with no equity at all to tap.
Banks are also balking at granting second mortgages, even when there is plenty of equity to back them up, to those with credit records that are less than perfect or whose pay is heavily reliant on commissions or bonuses, the article notes.
Colleges are now scrambling to adjust, with many, for now, having to lobby for other forms of aid for students whose parents are suddenly house poor.
And some parents, even if they do have the equity to tap into, are becoming more skittish about using it to pay college bills given the economic turmoil, Rick Darvis, a founder of the National Institute of Certified College Planners in Syracuse, tells the Times. via Boston.com.
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This is so sad. I knew a man who was sending both of his daughters to college on the money his medical company was making during good times, now both of his daughters are barely making it through with what they can get on student loans. There is just no more money left around for them to go to college with.
its so true my parents did the same and i went to college, but i cant do the same for my kids, i am really scared, i have to work twice as hard and maybe do a side business or something.
I must have been lucky. My2 sons were in collage during the boom. The appreciate went directly for their tuition. What a difference a few short years make.
That's right, families sending children to school are greatly affected by the housing crisis. More often, this causes the children to stop from their schooling.