It is constantly reported that the price of attending college is rising. In a time when inflation has been prevalent, what does that actually mean? To put the cost of higher education in perspective, compare it to two of the other important expenses we face: medical care and housing. Between 1987 and 2008, the cost of healthcare increased by 5.0% per year on average and the cost of housing increased by 5.1% per year on average. During the same time period, college tuition and fees increased an average of 7.0% each year.
Increasingly, families, after exhausting federal loans, scholarships, and grants, still face a gap in financing for college. These families must find ways to cover this gap with savings and private student loans. Due to the credit crisis and securitization market dislocation, many traditional lenders have retreated from student lending markets. This summer, demand for fair value student loans will be significantly greater than the supply of these loans, leaving families with a funding crisis. However, there is new hope for some families that face this critical challenge. In the past 14 months, over 100 credit unions have stepped into the private student lending market to ensure their members can go to college.