TRYING TO AVOID A STUDENT LOAN CRISIS

College bound seniors who will soon be graduating from high school could be in for an unpleasant surprise when they try to secure a student loan this summer.

Aftershocks from the sub-prime mortgage mess are beginning to reverberate through the entire loan industry, including lenders specializing in student loans. Federally guaranteed student loans are vitally important to middle class families wishing to send their kids to college but there is a growing concern that they might not be available for everyone.

Suspending Lending
More than 50 lenders of federally guaranteed loans, including some of our nation's largest originators of Stafford and PLUS student loans, and nearly 20 additional private student loan issuers have indicated that they intend to suspend their lending activities. Combined, these lenders represent nearly 15 percent of the federally guaranteed student loan market and make up two thirds of the loan consolidation business.

In all, nearly $8 billion of financing is now out of the market as lenders find themselves cut off from access to traditional sources of funds. Some experts believe this may be just the start of a larger exodus of lenders from the student loan market.

Problems Could Have Been Avoided
In 2007, I offered an amendment that would have reduced cuts to the Federal Family Education Loan (FFEL) Program, which would have ensured it could continue to stand on a stable financial foundation and remain a viable option for America's families and students as they sought affordable college assistance. The amendment failed by a 36-61 vote and now the effects of that policy are being felt in the market, the banks, and most important, in the budgets of America’s middle class families.

Now we are seeing the capital market crisis compound the impact of those cuts just as middle class families begin seeking loans for the upcoming school year. College is an important choice in any student's life and we must make it easier – not harder – for our young people to attend college.

Avoiding the Credit Crunch
It would be a tragedy if a bright young person who worked hard to get good grades through high school was unable to go to college because they didn’t have enough money and couldn’t find a student loan.

The credit crunch can be avoided but the Administration is going to have to act soon. I have joined with 19 of my colleagues from both sides of the aisle in a bi-partisan effort urging the Secretaries of Education and Treasury to take corrective action. If they don't, an estimated 100,000 families may be directly impacted.

There are steps that the Administration can easily take that safeguard the interest of the taxpayer while encouraging and helping lenders to provide loans, and in so doing, help prevent today's concerns from becoming tomorrow's crises.

College students face enough crises in their lives from tough classes to skyrocketing tuition. They don't need to add to the list by not being able to find an affordable student loan.

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	Column	April 28, 2008
TRYING TO AVOID A STUDENT LOAN CRISIS College bound seniors who will soon be graduating from high school could be in for an unpleasant surprise when they try to secure a student loan this summer. Aftershocks from the sub-prime mortgage mess are beginning to reverberate through the entire loan industry, including lenders specializing in student loans. Federally guaranteed student loans are vitally important to middle class families wishing to send their kids to college but there is a growing concern that they might not be available for everyone. Suspending Lending More than 50 lenders of federally guaranteed loans, including some of our nation's largest originators of Stafford and PLUS student loans, and nearly 20 additional private student loan issuers have indicated that they intend to suspend their lending activities. Combined, these lenders represent nearly 15 percent of the federally guaranteed student loan market and make up two thirds of the loan consolidation business. In all, nearly $8 billion of financing is now out of the market as lenders find themselves cut off from access to traditional sources of funds. Some experts believe this may be just the start of a larger exodus of lenders from the student loan market. Problems Could Have Been Avoided In 2007, I offered an amendment that would have reduced cuts to the Federal Family Education Loan (FFEL) Program, which would have ensured it could continue to stand on a stable financial foundation and remain a viable option for America's families and students as they sought affordable college assistance. The amendment failed by a 36-61 vote and now the effects of that policy are being felt in the market, the banks, and most important, in the budgets of America’s middle class families. Now we are seeing the capital market crisis compound the impact of those cuts just as middle class families begin seeking loans for the upcoming school year. College is an important choice in any student's life and we must make it easier – not harder – for our young people to attend college. Avoiding the Credit Crunch It would be a tragedy if a bright young person who worked hard to get good grades through high school was unable to go to college because they didn’t have enough money and couldn’t find a student loan. The credit crunch can be avoided but the Administration is going to have to act soon. I have joined with 19 of my colleagues from both sides of the aisle in a bi-partisan effort urging the Secretaries of Education and Treasury to take corrective action. If they don't, an estimated 100,000 families may be directly impacted. There are steps that the Administration can easily take that safeguard the interest of the taxpayer while encouraging and helping lenders to provide loans, and in so doing, help prevent today's concerns from becoming tomorrow's crises. College students face enough crises in their lives from tough classes to skyrocketing tuition. They don't need to add to the list by not being able to find an affordable student loan. ###