The housing market is pretty bleak and the subprime lending spectrum is starting to tighten up in a big way. But as the credit crunch takes serious hold on the markets, it is beginning to affect an area often overlooked. Student loans are getting a bit harder to obtain, and when you do land a loan, you can kiss low interest rates good-bye.

Stricter Lending Guidelines
Already student loans are coming with stricter guidelines. Students who rely on these loans to foot the bill for tuition, housing and other school related expenses have had a relatively simply time finding loans that had low interest rates. Now, with the lending industry in turmoil, student loans require higher credit scores and come with higher interest rates. This is bad news for students who have yet to establish good credit – especially if their parents are struggling with other loan issues that can be damaging their credit as well.

The College Cost Reduction and Access Act passed in 2007 has already made student loans less profitable for lenders, and they won’t take the hit lying down. It’s simply a matter of passing the buck from one party to another. If the loans are less profitable, the bank will find ways to raise profitability – namely by passing rate hikes on to borrowers.

Higher Payments
Sallie Mae, the largest of the student loan lenders, hasn’t publicly announced exactly what changes are being made to lending standards, but industry experts expect a one percent hike in interest rates along with a big jump in credit score requirements just to qualify.

Other changes that will hurt students include diminishing perks such as waived fees or consolidation discounts. Banks need to earn as much as they can from these loans, so they will start offering incentives to pay interest early on the loans rather than deferring it completely until after graduation. (more…)

The year 2007 was marked with more than a few bad tidings. A falling housing market, a slew of products tainted with lead, popular children’s toys transforming into a date rape drug, and even a claim that Keith Richards snorts his father’s ashes. No year is perfect, but 2007 certainly has a place in the record books

Subprime Crash
The housing market that looked so rosy is in a nosedive – or at least the subprime market is. Lenders found ways to expand their subprime lending during the peak housing years, only to find themselves looking at serious trouble when the market tightened up and patrons began defaulting on their loans. Merrill Lynch, the number one subprime lender has reported its worst quarterly loss in its 92 year history. Merrill is in good company with many other lenders feeling the pain of foreclosure, and things certainly aren’t looking much rosier for the first few months of 2008.

Fun, Games and Lead
It was a bad year to be in charge of product production in China. It seems every product that was manufactured in China this year encountered problems. Popular toys of Sesame Street characters, Thomas the Tank Engine and Barbie were tainted with lead. Dog food was killing dogs, and even toothpaste contained deadly chemicals.

As companies tried to mitigate the damage and recall products, the news just kept getting worse. At one point, Mattel recalled an extremely popular set of Thomas the Tank Engine play sets and send along a new boxcar to help customers handle the recall more gracefully. Then, three months later, the company was forced to recall the box cars, too. Ouch. (more…)