I accepted my student loans for the current semester over the past summer, and I dutifully selected the same lender that I had for the previous school year. Imagine my surprise when I learned that the financial aid office said that they could not secure funding from this specific lender because of the then-looming credit crisis. It was like the whole financial industry stood up and shouted "take that, Justin!"
Seeing as I didn't have fifty grand just lying around (shocking, I know), I had to pick a new lender. And it's not just finding a lender for tuition and living expenses that is the problem; law students also have to worry about finding money to hold us over between the time we graduate and start work after taking the bar.
The no-man's-land between graduation and employment is the subject of an article in The National Law Journal. The article talks about how the slowing economy will make repaying loans more difficult and urges that students take "caution" when taking on additional debt. This advice is nowhere near as interesting as the advice I'm about to give you.
I'll let you in on a secret. Bank lenders are not the only game in town for financing your education and expenses.
Instead, consider social lending. No, I'm not talking about MySpace and Facebook. I'm talking about sites like GreenNote, Fynanz, Virgin Money USA, and Zopa. These sites link regular people who need money with regular people willing to lend money. I was tipped off to the existence of social lending by a sfgate.com article that talks about how the credit crunch is affecting students that need private loans to pay for the rising costs of tuition. The article profiled a Santa Clara University grad student that was $7,000 short on school expenses. Rather than take on a private loan with a high interest rate, the student pitched her story to friends and family and ended up with a $5,000 commitment from a friend.
While social lending may not work for everyone, it's good to know that private lenders are not the only source of funding available to the savvy student. If you're wondering how you're going to make it this year or the next, consider researching some non-conventional forms of "financial aid."
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