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President George W. Bush Speaks On The Brewing Student Loan Crisis
In his weekly radio address, President Bush spoke about the brewing
crisis in the student loan markets. WATCH VIDEO
In his address he mentioned the “Lender of Last Resort Program” for
student who cannot secure funding for college. He further mentioned
the need for the ability of the govenment to step in and buy the loans
when necesarry to provide liquidity to the system.
He also signaled to the Senate get something started, as the House of
has already passed the ”Insuring Continuing Accessing Student Loans
Act” and the Senate has yet to act on the issue.
The Presdent would need a bill on his desk, before June 1, 2008 to avoid
any major problems with loans for the September Semester.
Wall Street Journal Blames Congress For This Mess
Yesterday the Wall Street Journal reported on the student loan
crisis brewing in the United States, blamming the legislature for
passing the “College Cost Reduction and Access Act”, last fall.
This act reduced the interest rate paid by borrowers of Federal
Guaranteed Loans. Next congress convinced private lenders to
cut the rate for Stafford Loans by .70 Basis Points & cutting the
popular Consolidation Loan Products by .65 Basis Points.
The problem is, this action reduced profit’s in these products
making them less disierable products for investors who purchase
these assest backed securities. These are the market makers who
keep this wheel spinning. Without them, the wheel stops.
Now congress, ( The Same Guys That Caused This Mess ), are in
the process of putting together a Tax Payer Bailout to fix there
mess. The bill proposes that the Department of Education would
purchase those loans ( And There Risk !!! ) from the lenders with
tax payer money.
Perfect example of why our Government has no place in trying to
control prices in a Free Market Economy.
We will keep you posted.
Sallie Mae Announces It Is Dropping Student Loan Consolidation’s
Student loan consolidation market just got a hair-cut, as Sallie Mae
the countries largest student loan lender announced it was getting
out of the student loan consolidation business. The move is sure to
hit millions of college graduates in 2008.
Sallie Mae had already announced in January, that it would be cut-
ting back on making students loans, taking a much harder look at
the students ability to pay back the loan.
Bank of America announced last week that it was also stopping its
student loan lending, joining 46 other feaderal student lenders who
have also ended their exposure to student loans.
With the sky-rocketing cost of college tuition and the credit crisis
hitting students in 2008, many students may have to wait untill
the business cycle corrects or until Uncle Sam come to the rescue.
