Fallout from the subprime mortgage meltdown is affecting many areas of the loan industry, including educational loans, said Chuck Sanders, chief executive officer of South Carolina Student Loan Corp. He said his agency has had 28 unsuccessful student loan auctions over the last few weeks, meaning it is not accessing available capital at favorable rates.
“Many lenders are seeing a negative return on funds, and they do not have other sources of capital to draw upon,” he said. “This means that they can only continue under current market conditions for a circumscribed period of time.”
For lawmakers such as Rep. Bobby Scott, D-Va., a Congressional Black Caucus member, the loan crisis is another sign that the federal government must provide more need-based grant aid. “We’re leaning much more heavily on loans than we previously had,” he said. “We have to make sure that Pell Grants and work/study cover more of the costs.”
Lawmakers also urged action before the peak lending season in August just prior to the new school year. “No one is looking forward to the scenario of hundreds of parents calling our offices because of difficulties with student loans,” said Rep. Jason Altmire, D-Pa.
Click here to post and read comments
© Copyright 2005 by DiverseEducation.com
