"NBC Nightly News" has found yet another hardship story caused by the credit crunch - prospective college students seeking student loans.
The March 6 "Nightly News" aired a segment about how a lack of funding for student lenders will cause some students not to be able to attend their first choice of college.
"More than a dozen lenders have pulled out of the federal student loan program, unable to raise enough money to make loans," NBC correspondent Tom Costello said. "Now - Pennsylvania, Missouri, Michigan, New Hampshire and Iowa have suspended parts or all of their student loan programs - unprecedented."
According to Costello, "many" students could end up with loans that have interest rates "pushing 11 percent." But according to Bankrate.com, the national overnight average for student loans ranged from 6.8 percent to 8.5 percent. That's a distant cry from Costello's dire prediction.
As a solution to this problem, Costello suggested government intervention. "Pressure is building on the federal government to step in as the lender of last resort," Costello said.
But the federal government is behind making college unaffordable in the first place. Since education policy has allowed the government to open its coffers up and loan or give money for college education, institutions have been able to raise tuition at a rate that by far outpaces inflation.
"With more money available for loans, colleges feel a degree of freedom to increase tuition," a Sept. 28, 2007 Investor's Business Daily editorial said. "In 1987, when he was secretary of education, William Bennett noted that rising federal aid had ‘enabled colleges and universities to blithely raise their tuitions, confident that federal loan subsidies would help cushion the increase.'"