Today’s Detroit News reports that the state of Michigan has suspended the MI-LOAN student loan program indefinitely. Apparently losses in the sub-prime loan industry have damaged the ratings of companies that offered bond insurance, leading Michigan officials to believe they would have difficulty selling bonds to generate the capital needed to make loans. With programs like MI-LOAN unavailable, more and more students will need to turn to more expensive lenders, meaning that:
Students who are not careful can be stuck with loans “that are frankly no better than charging tuition on a credit card,” said Mark Delorey, Western Michigan University director of financial aid.
The federal government caps the amount students can borrow from it each year – $3,500 for freshmen to $5,500 for seniors – but education costs have soared to the point where Michigan universities average annual cost for tuition, room & board is $15,000+. This has led students to more private loans through banks, credit unions and state agencies. The article states that in 2005-06, students borrowed $17.3 billion in private loans, compared with $1.3 billion a decade earlier, according to the College Board.
Looks like it just got that much harder to overcome Michigan’s economic through education…