“Over 90 percent of our students use the South Carolina Student Loan Corporation (SCSLC). This source is as safe as it gets in the current climate. While many national lenders are in the program to turn a profit, SCSLC is a non-profit lender of student loans created by the state back in 1974.”

— Keith Reeves, associate director of student financial aid, Clemson University

CLEMSON — Despite financial cataclysm elsewhere in academia, student loans at Clemson University have remained comparatively stable thus far.

During the 2007-08 academic year, Clemson students borrowed from more than 30 lenders. Since that time, nine of those lenders have either pulled out of the Stafford Loan program or have suspended making new loans.

Although students utilizing these lenders have been forced to find new loan sources, the impact has been minimal. The nonet made up less than 1 percent of Clemson’s Stafford Loan tally.

“It is too early to tell, but we do anticipate a slight shift in lender choice, particularly for entering freshmen from out-of-state,” Clemson Associate Director of Student Financial Aid Keith Reeves said.

In an economy beset by mortgage market implosion and other credit woes, some student loans have begun to wobble. On Monday, the Massachusetts Educational Financing Authority (MEFA) — which secured more than $500 million in loans for about 40,000 students last year — announced it would not offer loans for the 2008-2009 academic year.

MEFA offers fixed-rate loans to students who live or attend school in Massachusetts.

In April, MEFA announced it would cease to offer federal education loans because of soured credit markets, and last month the organization said it would still offer private fixed-rate loans. Now neither is viable.

But Reeves does not expect a similar occurrence in South Carolina.

“The MEFA counterpart in S.C., the S.C. Educational Assistance Authority/S.C. Student Loan Corporation, has secured funding necessary to make all anticipated loans for the 2008-09 academic year,” Reeves said. “Most issues, especially those associated with the ‘credit crunch’, have had a minimal impact at Clemson and in South Carolina in general due to the strength of SCSLC.

“Over 90 percent of our students use SCSLC. This source is as safe as it gets in the current climate. While many national lenders are in the program to turn a profit, SCSLC is a non-profit lender of student loans created by the state back in 1974.”

In the not so distant past, Clemson used SCSLC as its “default” lender. If a Clemson student was searching for a Stafford, SCSLC was used unless that students asked for another lender — which they were free to do, Reeves said.

However under current regulations, a student must first choose a lender — without a university-made suggestion — before a loan can be processed. This change affects new borrowers only.

“Repeat borrowers remain with their current lenders,” Reeves said.

The change in advisement policy came following a national controversy in March 2007. New York Attorney General Andrew Cuomo filed a suit against Educational Finance Partners (EFP) regarding deceptive practices in the company’s student loan business. Cuomo claimed EFP made paybacks to universities who pushed their product. Along with many other schools, Clemson worked with EFP at the time.

Cuomo’s lawsuit launched the first national investigation of the college loan industry, an $85 billion a year business. After Cuomo filed against EFP, Clemson performed an internal audit and hired a consultant to examine university dealings with the lender. The consultant found nothing unscrupulous. However, Clemson terminated its relationship with EFP in July 2007.

“Changes in federal regulations resulting from the N.Y. Attorney General’s Office investigation into questionable lender practices and increases in loan limits have prompted us to make modifications to our systems and consumer information to not only ensure that we are in compliance but to also provide better service to our students,” Reeves said. “While not all pieces of this process were in place earlier in the summer, we are now processing at full capacity and anticipate being up to date by the payment deadline in mid-August.”

In the new paradigm, Reeves cautioned against accumulated borrowing. Although he can no longer recommend lenders to students, he recommends they evaluate choices closely. Origination and insurance fees should be noted.

“Students should also only borrow as a last resort and then only what is absolutely necessary,” Reeves said. “The credit crunch is only partially to blame for the current climate in the student loan industry. Changes in federal subsidies and guarantees have had a significant impact as well.”

In May, the U.S. Departments of Education and Treasury debuted a plan to offer government support to providers of student loans.