Banks Cancel Student Loans at Non-Rich 2 Yr Colleges

Now that the economy is threatening to implode thanks to an unregulated banking industry that ran amok over the last 7 years, that same aforementioned banking industry has apparently decided that the only safe student loans are the ones made to families that don't need the money and are already headed for fancy schools. Community colleges? Plebian 2-yr schools? Fah. Let em rot.

Some of the nation’s biggest banks have closed their doors to students at community colleges, for-profit universities and other less competitive institutions, even as they continue to extend federally backed loans to students at the nation’s top universities.

Citibank has been among the most aggressive in paring the list of colleges it serves. JPMorgan Chase, PNC and SunTrust say they have not dropped whole categories, but are cutting colleges as well. Some less-selective four-year colleges, like Eastern Oregon University and William Jessup University in Rocklin, Calif., say they have been summarily dropped by some lenders.

The practice suggests that if the credit crisis and the ensuing turmoil in the student loan business persist, some of the nation’s neediest students will be hurt the most.

Nothing new about that. Isn't that the way it's been all during the Bush Years? Since when was any corpo or govt agency, let alone Bush himself, moved to suggest that sacrifices had to made by the rich in order to level the playing field? Wasn't Bush's whole presidency dedicated to keeping that field un-level? to keeping the rich in full and tight command? This is flat-out class war stuff and NYT reporter Jonathan Glater comes as close as he probably could to saying so and still keep his job.

Tuition and loan amounts can be quite small at community colleges. But these institutions, which are a stepping stone to other educational programs or to better jobs, often draw students from the lower rungs of the economic ladder. More than 6.2 million of the nation’s 14.8 million undergraduates — over 40 percent — attend community colleges. According to the most recent data from the College Board, about a third of their graduates took out loans, a majority of them federally guaranteed.

“If we put too many hurdles in their way to get a loan, they’ll take a third job or use a credit card,” said Jacqueline K. Bradley, assistant dean for financial aid at Mendocino College in California. “That almost guarantees that they won’t be as successful in their college career.”

(emphasis added)

Again, isn't that the point? Isn't this about weeding out the competition from upstart riff-raff who might take high-paying jobs away from the financial elite?

By splitting out community colleges and less-selective four-year institutions, some remaining lenders seem to be breaking the marketplace into tiers. Students attending elite, expensive, public and private four-year universities can expect loans to remain plentiful. The banks generally say these loans are bigger, more profitable and less risky, in part perhaps because the banks expect the universities’ graduates to earn more.

And there it is: the rich protect the rich, everybody else can go to hell.

Comments

[eRobin]

Yep, entrenching the class structure is exactly the point. It stinks even worse than the article lets on because a lot of two-year school students plan to springboard to four-year schools, which, one supposes, would make them better earners and credit risks. My son is planning to do that. My Congressman did.

[mick arran]

Good point. Community colleges are very often the doorway to bigger colleges for limited-income students. But even when they're ends in themselves, they allow students with limited means to get a decent education and a better job upon graduation. They're also a lot cheaper (that's in the article but I didn't talk about it), so an education dollar goes a lot further.

Maybe that's what the banks are afraid of.