December 9, 2008

For more information: Bob Cohen                           Luke Thomas
                                 202-336-6836                      202-336-6803
                                 bobc@career.org                  luket@career.org

Career College Association Survey Finds Colleges Offering Students Gap Financing:  Private Loan Availability Almost Gone

Washington, DC – The Career College Association (CCA) announced today the results of a survey of its member colleges indicate that a substantial percentage of these institutions are stepping in themselves to ensure their students have access to financial aid because of the unavailability of private student loans for other than the most creditworthy students.  The survey assessed what impact increases in unsubsidized loans and Pell Grants are having on students trying to meet tuition obligations as well as the impact the credit crisis is having on student access to alternative loans.

CCA President and CEO Harris N. Miller said, “The private student lending market has almost disappeared, except for an economically elite few, as a result of the global credit crunch.  We are pleased to see that, in a time when students are having enormous difficulty obtaining the financing necessary to earn a college degree,  our educational institutions are being proactive in ensuring lines of credit continue to flow by using their internal resources.  Non-traditional students are particularly hard hit by harsh economic times, and this action on the part of many schools cushions the blow.”

Miller continued:  “Our typically older, diverse student bodies often do not have substantial family financial support or high credit scores to make them recession-proof. Many career colleges recognize these facts and have stepped into the breach to buoy students who would have normally used private lending to pay for the gap in their educational expenses after all other avenues, including Federally guaranteed loans, are exhausted.  We recognize institutional assistance is not a long-term solution, but our schools are healthy and this demonstration of support to students should be applauded.”

Ninety-one CCA members representing 602 campuses responded to the survey. Notable findings include:

• 91% say their students are experiencing a gap in funding – the “gap” between available government aid and the cost of college – with 26% saying that gap affects between 31% and 50% of their students.
• 77% say their students use alternative loans to fund the gap; 42% use institutional loans; and 72% use institutional payment plans.
• The gap in tuition financing has had a noticeable effect on the number of students pursuing postsecondary education. Almost 70% of the respondents have had an increase in no-shows (students registering for classes but not attending).

With regard to private lending, the survey revealed the following:

• 64% of the survey respondents say students needing private loans have been unable to get them. 86% say there is a decrease in the number of students with a cosigner who have been able to get the loans. 55% of respondents say only 0 – 10% of students without a cosigner have been able to get private loan funds, a decrease of about 83% from both six months and one year ago.
• 90% of those declined are declined because a cosigner was not available.
• 71% of those able to obtain private loans were required to have a cosigner when this was not required previously.
• 63% say loans are more expensive, such as having higher interest rates or fees.
• 27% have experienced a delay in loan disbursements.
• 64% stated they had to find a new lender.

With respect to institutional lending, CCA’s survey found considerable help was being offered to students by the schools themselves:

• 12% of respondents offer institutional loans to all students.
• 45% offer institutional loans only to those students with a gap who cannot obtain private loan funding.
• 17% say the average amount of institutional loan is less than $1,000; 15% say it is $1,000 to $2,000; 13% say it is $4,000 to $5,000; 6% say it is $10,000 or more.

The Career College Association (CCA) is a voluntary membership organization of accredited, private postsecondary schools, institutes, colleges and universities that provide career-specific educational programs. CCA has more than 1,450 members that educate and support over one million students each year for employment in over 200 occupational fields. CCA member institutions provide the full range of higher education programs: masters and doctoral degree programs, two- and four-year associate and baccalaureate degree programs, and short-term certificate and diploma programs. Visit CCA at www.career.org.