Cyndi Loza

Wooster High School senior Shobian Flinn was told that scholarships and grants can pay for most college expenses.

“I’m slightly more realistic than that,” said Flinn, 18, of Sparks. “Because it’s one thing to dream about getting all these scholarships, and it’s another thing to actually qualify and get these scholarships.”

Flinn is among the many students who do not qualify for need-based scholarships but cannot afford to pay their way through college.

And for students such as Flinn, options have become even more limited.

This month, 46 student lenders stopped making federally guaranteed student loans, either temporarily or permanently, because of the credit crunch.

Distress in the $330 billion market for auction-rate securities in recent months has rippled into the student loan market, and several states have suspended their college loan programs. The 46 lenders accounted for 12 percent of the federally backed student loan market, according to FinAid.org, a Web site focused on student lending.

Companies including Washington Mutual Inc., Sovereign Bancorp Inc., College Loan Corp., CIT Group Inc., NorthStar Education Finance Inc., HSBC Bank USA and Zions Bancorp have stopped making federally guaranteed student loans in recent weeks.

Impact in Reno

A University of Nevada, Reno student receiving a loan from one of those companies will be notified by e-mail to switch to another lender, said Sandra Guidry, interim director for the Student Financial Aid and Scholarships.

Other than that, Guidry said, students should not be affected and the banks the university uses — Wachovia, Bank of America and Wells Fargo — will be able to “ride this out.”

“Those are the banks that will probably stay in business because they have other areas to acquire revenue,” said Guidry, adding that most lenders that backed out of the business focused on student loans.

As more lenders stop student loans, credit unions might be a better option, said Daniel Penrod, an industry analyst for the California/Nevada Credit Union Leagues.

“My thoughts are that you’ll see more credit unions stepping up,” Penrod said. “Banks are moving away from private funding, and I think you’ll see more credit unions step in to fill that gap.”

Penrod said credit unions will try to market and advertise more of their options to students.

As nonprofit banks, credit unions have more of a relationship with individuals than banks, Penrod said. He said banks look at student loans as purely profit.

“That’s the reason, in these times, you’re seeing banks move away from these types of products. The profit margin is diminishing,” Penrod said.

Flinn has estimated budget of $14,300 to attend UNR, including tuition, fees, books, supplies, personal expenses, transportation and insurance.

She said she has a Millennium Scholarship from the state and a $400 grant from Join Together Northern Nevada. The four-year millennium scholarship is worth $10,000 and is available to any student who graduated with a diploma from a Nevada public or private high school with a grade point average of at least 3.25.

She plans to work during the summer as a cashier at a Target and as a restaurant waitress.

“I know UNR is not extremely expensive, but it’s still more than I have right now,” said Flinn, who wants to study computer programing.

Flinn said she wants to pay without having to get a student loan.

“Unless I absolutely have to, I don’t imagine myself having one,” Flinn said. “I don’t like the idea of being in debt. I’d rather work all summer and have the actual money to pay for something than having to have (a loan) over my head.”

First-year Nevada medical student Jenny Thomas said undergraduate students probably will need to take a student loan if they plan to finish college.

“Coming right out of high school you can’t find a job that you can support yourself living on and pay for college,” said Thomas, 24, of Reno. “So, you’re going to have to take out a loan.”

Thomas said she is no stranger to student loans, owing $15,000 for her undergraduate degree at Brigham Young University and with a $30,000 loan for her first year of medical school. She expects have borrowed about $120,000 by the time she graduates.

“There’s no way I wasn’t going to take out a loan for medical school unless my family was exceptionally rich,” Thomas said.