Congressional leaders are considering a variety of bills to impede a late summer student loan crisis.
For many policymakers and worried families, the countdown to a possible fall student loan crunch has begun. With July and August being among the busiest months for the student loan business, key lawmakers — including many Hispanic and Black leaders — are increasingly concerned that needy students will not have sufficient access to credit to help them attend college in the fall.
Since the current environment is largely uncharted territory for lenders and loan guaranty agencies, many experts are looking to Congress to step in with short- and longterm remedies.
“As of today, no student has been unable to find a lender for a federal student loan,” says Rep. Rubén Hinojosa, D-Texas, chairman of the House postsecondary education subcommittee. “However, we are not going to wait until students and families are denied loans before putting safeguards in place.”
So far, 61 lenders have left the Federal Family Education Loan program (FFEL), the chief program for subsidized student loans, says Mark Kantrowitz, founder of FinAid.org, a service that monitors the student credit markets. Among the top 100 lenders by volume, 22 have left the program, he says.
Lenders increasingly cite credit difficulties as a result of home foreclosures and mortgage industry problems. Some also have had to write off losses from private educational loans at the same time their federal subsidies have declined as a result of the College Cost Reduction Act.
And the U.S. Department of Education announced in late April that it lacks authority to bail out student loan companies. “There’s no solution coming out of the administration,” Kantrowitz says. “The ball is now in Congress’ court.”
