A recent study from FindLaw.com, a legal marketing and information site, has found that college graduates are struggling more than ever to obtain personal loans. After over 130 bank failures in 2009, many financial institutions have shied away from handing out personal loans unless they feel comfortable that they will get their money back. The only problem is that many college graduates have not had a chance to prove that they’re capable yet.
No Credit History, No Personal Loan
The FindLaw.com study found that 22 percent of people between the ages of 18 and 34 have been refused a mortgage, personal loan or credit card within the last year. This percentage is actually twice as high as any other age group. Even more, this age group is four times more likely to report that they’ve been turned down for a personal loan than people over the age of 55.
Experts say that the major reason for the denial is that the younger group hasn’t had a chance to build up their credit history. Unfortunately, with banks failing to loosen their purse strings, college grads may be caught in a Catch-22 for some time.
Students Turning to Non-Traditional Lenders
President Barack Obama has been pushing financial institutions to lend for several months to not only help consumers but help to build the economy. While reports have shown that banking establishments have tried to give out a little more money, it looks as though recent grads still need additional help.
Some are turning to peer-to-peer lending, which offers lower interest rates and fewer restrictions for obtaining loans. And others are turning to “The Bank of Mom and Dad.” The only problem is that Mom and Dad are in the market for personal loans themselves and don’t have the money they used to.
As the economy slowly but surely improves, one can only hope that lending will improve with it. If not, college students may have to start concerning themselves with building credit more than attending class.
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