Despite rising costs at colleges across the country, a weak national economy and the imminent Wisconsin state budget shortfall, UW-Madison officials said most students will not see an impact on their student loans.
Susan Fischer, director of student financial services for UW-Madison, said about 17,000 students receive Stafford loans and only 200 of them will have to find a different lender.
Fischer said this is a result of a handful of companies deciding not to be involved in the federal loan process because of recent changes by Congress that have made it less profitable.
They were risky anyway, and now they're just a little too risky,"" Fischer said.
Stafford loans are federal loans that give between $3,500 and $5,500 for undergraduates. The federal government pays interest on them in some instances.
Federal loans are governed by federal rules and regulations and generally have a lower fixed interest rate. They rely on the private-loan sector to provide the capital.
Fischer also said some students choose to take out private loans, which tend to be more conservative in their lending. These companies are not federally connected and often have higher interest rates.
Connie Hutchinson, the executive secretary of the Higher Education Aids Board, which administers the state financial aid programs, said students are taking out more alternative loans than they have in the past.
""When money is difficult to come by, [students] resort to alternative methods,"" she said.
According to Hutchinson, she is not expecting any cuts in the already appropriated money from the state for the 2008-'09 academic year.
""I think that all of the state programs will be affected when they set the budget,"" she said, referring to the upcoming budget repair bill.
Gov. Jim Doyle is expected to propose a bill this week to repaire the budget shortfall, possibly affecting funding to the UW System.
