Black and Hispanic Students Hit Hardest by Credit Crunch

By Santos, José Luis | Diverse Issues in Higher Education, April 17, 2008 | Go to article overview

Black and Hispanic Students Hit Hardest by Credit Crunch


Santos, José Luis, Diverse Issues in Higher Education


Opportunities for equitable access to college are harder to come by than ever, with the shift in federal aid policy moving from grants to loans, the passing of the College Cost Reduction and Access Act of 2007 (CCRAA) and the collapse of the consumer credit markets.

These three factors are certain to affect anyone seeking financial aid for college tuition and create a perfect storm for the already troubled loan industry, which is towing millions of borrowers now dependent on loans to finance their college education. Yet, it will be students from middleand low-income homes - largely Blacks and Hispanics - who will be hurt the most, lacking the resources to adjust to the increased financial burden they will be forced to carry.

In the 70s and '80s, with the federal government committed to increasing educational opportunities, most federal aid policies were designed to increase access to college for students who couldn't afford a college education. Since that time, however, the federal government has decreased its investment in grants and favored loans instead.

The most recent College Board data bear proof: From 1996-97 to 2006-07, total federal grants for undergraduate students adjusted for inflation grew by 83 percent ($9 billion to $16.5 billion); total federal loans grew by 51 percent ($25.8 billion to $39.1 billion); and state and private loans grew by a staggering 854 percent ($1.6 billion to $15.7 billion). In short, the federal government distributed $97 billion in aid to undergraduates from all sources except from the state and the private sector. At the same time, students borrowed almost $16 billion from state and private sources to bridge the shortfalls to finance their college education.

The CCRAA, effective October 2007, had a large effect on lenders, and slashed approximately $19 billion in subsidies, while lowering its guarantee from 99 percent to 95 percent. Because the subsidies and the federal guarantee have decreased and loan defaults have increased, lower profit margins for lenders have resulted.

Adding to the mix, the collapse of the housing market in 2006 and 2007 hurt the entire credit market Student loan pools traditionally auctioned on the secondary market to allow lenders to raise capital in order to continue making loans have, in effect, dried up. Investors, skittish about the housing market collapse, grew concerned with the potential losses from student loan defaults and lost their appetite to invest in student loan pools.

The combined effect from the CCRAA and the consumer credit crunch means less profit for lenders, higher losses from loan defaults and lack of capital for future loans.

What's next? Smaller lenders will exit the marketplace because of their inability to profit, raise capital and sell loans.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Black and Hispanic Students Hit Hardest by Credit Crunch
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.