Students Lose Billions as Colleges Petition for Loans

[flashl]

April 24 (Bloomberg) -- Students in the U.S. have lost access to more than $6.7 billion a year in education loans after private lenders fled the market, spurring schools including Pennsylvania State University and Northeastern University to turn to the Education Department's Direct Loan Program.

Dozens of lenders, led by College Loan Corp. and CIT Group Inc., stopped making federally guaranteed loans because the U.S. cut subsidies and investors hurt by the subprime-mortgage crisis shunned bonds backed by student loans. At least 178 schools have applied since Feb. 28 to let students borrow from the direct program, compared with 80 that applied for the program in all of last year.

Students took out about $68.2 billion in new U.S.-backed loans this academic year, according to Mark Kantrowitz, the publisher of FinAid.org, a scholarship and loan information Web site. The borrowing is projected to rise by almost $4 billion for the next school year as both the student population and costs increase, he said. More schools say they are seeking access to U.S. direct loans as private lenders drop out.

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The U.S. Education Department supports legislation allowing the federal government to buy student loans of banks and other private companies to ensure funds are available for further lending, Lawrence Warder, the acting chief operating officer of federal student aid, said yesterday.

Bloomberg

[glowing]

1. How about they get a direct loan from the Feds.. Its a really low interest

rate now...