(U-WIRE) AUSTIN, Texas – Sallie Mae, a popular education lending company, will no longer distribute private loans to students with low credit scores.
The information surfaced in a Security Exchange Commission report filed Tuesday by Corinthian Colleges, Inc. The company received a letter Jan. 18, from Sallie Mae saying it would no longer provide private loans to students with subprime or low credit scores.
“It would probably have a modest impact on the students here,” said Henry Urick, assistant director of student financial services.
Approximately 17,000 UT students have federal loans, and less than 3,000 students have private loans, Urick said. About 1,500 students receive loans from Sallie Mae, he said.
Sallie Mae announced last week that it plans to lay off 3 percent of its workers and denied rumors that the company was undergoing financial struggles.
“To understand current issues related to private loans, it is important to understand where private loans fall in the larger arena of paying for college,” Beth Guerard, a Sallie Mae spokeswoman, said in an e-mail. “We advise students and families to follow our three-step process: find free money, consider student federal loans and use private student loans to fill the remaining gap.”
Students that borrow from Sallie Mae said they are nervous about the effect recent problems will have on the amount of money they receive.
“That affects me because that’s my lender. I already don’t get that much in loans, and it’s really hard to come up with money. It’s really scary,” said communication studies senior Ysabelle Sosing.
Other students said they are concerned about the effects this change will have on students without an established line of credit.
“I think [credit lines] are just something else that students have to learn about, but it really isn’t fair at this point, since we are still pretty much kids – especially freshmen,” said biology freshman Evelyn Miranda. “I don’t agree with it.”
Students who have not established a line of credit may qualify for a private loan by applying with a credit-worthy co-signer, according to the Sallie Mae Web site.