In a bold move reflective of the volatile loan market, Michigan announced its decision to temporarily suspend the state-run Michigan Alternative Student Loan (MI-Loan) program. Alternative loans, otherwise known as private student loans, are often used by students to supplement federal Pell Grants and government loans.
Those who are ineligible for government aid or who don’t receive enough of it often look to alternative loans for additional funding assistance. According to the Associated Press, about 8,500 loans totaling $68 million were offered through the MI-Loan program last year. As of Friday evening, these loans will no longer be available to students.
In their notice, the Michigan Higher Education Student Loan Authority stated that “There is not sufficient available capital to continue making MI-Loans.” With student lenders facing the effects of a major mortgage crisis as well as subsidy cuts from the College Cost Reduction and Access Act, the pressure is on to make a profit. Numerous student lenders have already announced their plans to cut loan benefits and tighten eligibility requirements. Some have even closed their doors completely.
Michigan students eligible for MI-Loans (students attending Michigan colleges or universities) can still look to other lenders for assistance. In fact, JPMorgan Chase & Company is even decreasing their loan rates and fees. Once funding becomes available-- if funding becomes available--MI-Loans will again be an option.
To diminish their reliance on loans, affected students can also apply for Michigan scholarships. By conducting a free college scholarship search at Scholarships.com, students from each state will have access to information about more than 2.7 million college scholarships and grants worth 19 billion.
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