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Apr-17-2008Sallie Mae Sounds the Alarm(topic overview)
CONTENTS:
- NEW YORK -- Shares of student lenders were mostly down Wednesday after one was downgraded by an analyst and another said it would stop lending at some schools. (More...)
- A year ago, Sallie Mae accepted a $25.3 billion buyout offer from J.C. Flowers & Co., Bank of America Corp. and JPMorgan Chase & Co. The deal fell apart after Congress passed, and President George W. Bush signed, a measure cutting subsidies to student- loan providers. (More...)
- Shares of SLM Corp. declined Wednesday morning after an analyst downgraded shares of the nation's largest student lender amid more signs that turmoil in the credit market is slipping into the student-loan market. (More...)
- Core earnings were $188.3 million, compared with $251.2 million, or 57 cents a share, a year earlier. (More...)
- DL works great, delivering the kind of service to students that you usually wouldn't expect from a government program. (More...)
- The government has changed reimbursement levels on the loans it guarantees, making that business far less profitable for Sallie. (More...)
- Merrill Lynch downed the stock after the results, effectively saying a 10% haircut an opportunity to sell.) (More...)
- The Dow rose more than 250 points as investors shrugged off any concerns about oil passing $115 a barrel for the first time. (More...)
- Much has been made in the news lately about the current situation with student lending. (More...)
- KG(#5) No one is mandating Direct Lending. (More...)
- "Competition among lenders in the private sector served our students well for several years," Thompson said. (More...)
- Aside from new legislation, investors' aversion to risk has made it hard for lenders to raise money. (More...)
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NEW YORK -- Shares of student lenders were mostly down Wednesday after one was downgraded by an analyst and another said it would stop lending at some schools. The College Cost Reduction Act, passed into law in October, cut subsidies to student lenders and forced them to shoulder a greater share of the risk of students defaulting. Adding to their challenges, lower demand for asset-backed debt due to investors' dulled appetite for risk has made raising money to funds loans more expensive. "The combination of reduced government subsidies and elevated funding costs basically wipes out the margin on new (Federal Family Education Loan Program) loans," Morgan Stanley analyst Kenneth Posner wrote in a note to investors cutting his rating on SLM Corp., also known as Sallie Mae, to "Underweight" from "Equal Weight." SLM can retract borrower benefits such as origination fee waivers to make up some of the lost profit, but "it has no other ability to pass higher funding costs on to consumers since pricing is fixed by the government," Posner wrote. [1] The bank will also stop issuing federal consolidation loans, or refinancing outstanding student debt into a single loan. Sallie Mae, the nation's biggest student lender, stopped issuing consolidation loans this month, and other lenders like CIT Group Inc. have shuttered their student-lending businesses altogether. Last year's College Cost Reduction Act, which cut subsidies to student lenders and forced them to shoulder a greater share of losses from defaults, has eaten into student lending profits, Citi said. That legislation was the reason a team of investors including Bank of America Corp. and JPMorgan Chase & Co. bailed out of a $25 billion deal to buy Sallie Mae.[2]
Sallie Mae has said it will no longer offer consolidation loans for federal loans. State agencies in Iowa, Michigan, Montana and Pennsylvania have suspended their student loan programs. It's an election year. What does all this mean? Congressional hearings of course ! At 10 AM EDT, a hearing on the state of the student lending industry convened, and lawmakers and several proposals aimed shoring up the market are floating through Congress. I'm not so sure a little tightening in the industry is such a bad thing though. Student loans have become easy to get, allowing students to graduate from college with $50 thousand or more in debt, severely hurting their ability to get a good financial start in their adult lives. Fewer student loans may encourage kids to pursue lower-cost options for education, and that will be good for them long-term.[3]
Washington Sallie Mae, which last week announced that it would stop making federal consolidation loans, warned today that it may not have enough money to meet students' growing demand for Stafford loans either. Testifying before the Senate banking committee, John F. Remondi, Sallie Mae's vice chairman and chief financial officer, said applications for guaranteed student loans were up 26 percent this year, largely because of the departure of nearly 50 other lenders from the program. He warned that it would be hard for Sallie Mae to continue to fill the gap if the government did not act to restore liquidity to the credit markets and to reduce lenders' cost of capital. "The question is, How long do we continue to lend at a loss?," he said, asserting that every loan financed through the asset-backed securities market today costs the lender money. It does not appear that any students have been denied loans as a result of the lender departures. As the student-lending season kicks into high gear, and the credit crunch continues, lenders and some colleges are growing concerned that some students may have a harder time obtaining loans this fall.[4] The federal consolidation loans, which can be used by graduates to combine several federal loans into one to secure lower interest rates and monthly payments, accounted for nearly 70 percent of Sallie Mae's government-backed student loans last year. John Remondi, the chief financial officer of Reston, Va. -based Sallie Mae, formally known as SLM Corp., is among those set to testify at Tuesday's hearing. In the House this week, Rep. Paul Kanjorski, D-Pa., proposed legislation designed to pump money temporarily into the student loan market. Kanjorksi's bill would permit the 12 regional banks that make up the Federal Home Loan Bank system to invest their surplus funds in securities backed by student loans and to accept such securities as collateral. The banks also would be able to make money available to the banks and thrifts in their regions for student loans. Another House bill, sponsored by Rep. George Miller, D-Calif., was unanimously adopted last Wednesday and sent to the House floor by the Education Committee, which he heads. It would give the Education Department temporary authority to buy up loans from student lenders to ensure their access to capital.[5] The interest rate on the consolidation loans is capped at 8.25 percent and is fixed for the life of the loan. Sallie Mae said in its annual report for 2007, filed earlier this year, that it was no longer actively marketing federal consolidation loans -- which represented 67 percent of its portfolio of government-backed student loans, a proportion it expected to decline steadily. The company said its consolidation loan business surged from 2003 to 2006 due to aggressive marketing and low interest rates.[6]
Demand for that kind of debt has plummeted, even though the majority of student loans are highly rated and carry a federal guarantee. With investors seeking safer places to put their cash, Sallie Mae and other lenders have faced a dried-up market for securities and more expensive financing for those transactions. These inhospitable market conditions come just months after a new law reduced government subsidies for federally guaranteed loans, whose interest rates are capped at 6.8 percent.[7] Lenders can also issue loans directly to students, without backing or subsidy from the government. While this business is still profitable - "private" lenders are able to charge higher interest rates on their loans - bad credit has cropped up in some private lenders' portfolios. Sallie Mae set aside $884 million to cover bad loans in its $163 billion portfolio in 2007, leading to a loss of $896 million for the year.[8] In some cases, consolidation is now the more costly option for borrowers. Up until Friday, the advice for those still holding variable-rate student loans was to wait to consolidate until July 1 when they'd be able to lock in historically low interest rates. With fewer lenders offering consolidation loans - including Sallie Mae, eight of the top 10 students lenders have stopped offering these loans - these borrowers "are going to have a very difficult time finding a lender that will be willing to" consolidate loans, says Brett Lief, president of the National Council of Higher Education Loan Programs. If you're stuck in this bind, consider consolidating your loans with the government. (To get more information, visit this web site.)[9]
Granted, like all problems and lending issues, it helps if you are in the right and have been paying your lender what the terms state. This strategy may work even if you are close to being handed off to a collection agency. As a little background: My wife had all of her student loans through Sallie Mae, affectionately referred to around our house as the devil. Several of these private loans which Ms. Mae was holding on to were pulling in 13.25% interest! We had included some of these loans in an initial federal consolidation which never worked out. Apparently the incoming fax line at Sallie Mae was hooked right up to a paper shredder because they never received our requests to consolidate.[10] "Our goal is to continue making an IU Bloomington education as affordable and accessible as possible for our students," Theobald said. "Recent changes in the student loan market make Direct Lending the lower cost alternative for Bloomington students and their parents. Direct Lending also provides our students and their parents with a secure source of funding as they plan for next year." Since the fall of 2004, all IU campuses have been using Sallie Mae as its preferred servicer of student loans under the Federal Family Education Loan Program (FFELP).[11] Sallie Mae reported a loss of $1.6 billion in the fourth quarter as it faced higher borrowing costs and set aside $575 million to cover bad loans. The company is due to report its first-quarter 2008 results next Wednesday. Under the major federal student loan program, students can consolidate loans after they graduate or leave college.[6] The company put aside $137.3 million during the first quarter to cover actual and expected losses on outstanding loans, which was less severe than the $574.2 million of loan losses the company identified during the fourth quarter of last year and the $150.3 million it set aside during the first quarter of last year. Historically, Sallie Mae and other student loan companies have raised money by packaging loans into securities and selling them to investors. Investors have grown wary of such securities, much as they have lost their appetite for those backed by mortgages.[12] Many investors fear the slowing economy will result in higher losses on student loans. Wednesday's results showed a roughly 20 percent increase in write-offs of bad loans, looking at loans both on and off the company's balance sheet. As the largest student lender, Sallie Mae could gain market share as competitors leave, but the company is facing problems of its own. It planned to sell itself to a group led by private equity firms last year, but the deal fell apart as financing the transaction proved difficult.[13]
Sallie Mae, the nation's largest student loan company, has eliminated about 1,000 jobs over the past six months representing about 9 percent of its workforce, the company said yesterday. The layoffs are part of Sallie Mae's continuing effort to cope with cuts in federal subsidies, the collapse of a planned sale of the company, and an upheaval in the financial markets that has made it costlier for lenders to fund their business. "Under current conditions. loans can only be made at an economic loss," the company said in a news release announcing its financial results for the first three months of 2008.[12] The company's financing costs have risen amid the credit crisis. Student loan laws passed last year cut subsidies to lenders, pushing many to scale back their lending or to leave the business altogether. Sallie Mae Chief Executive Albert Lord said in a statement, "It has become obvious that we can only meet the enormous student credit demands we are seeing at Sallie Mae if there is a near-term, system-wide liquidity solution."[14] Sallie Mae said it originated more than $8.7 billion in student loans during the first-quarter, up from $8 billion in the year-ago period 'Today's environment is the most difficult we have seen in our 35-year history of student lending,' said Albert Lord, chief executive, in a statement. 'It has become obvious that we can only meet the enormous student credit demands we are seeing at Sallie Mae if there is a near-term, system-wide liquidity solution.' The company's shares closed at $16.26.[15]
ANALYST TAKE: Lehman Brothers analyst Bruce Harting expects Sallie Mae to set aside an additional $260 million and write off more loans in the first quarter. He also expects the company's "spread" - or how much more Sallie Mae collects on its portfolio than what it pays on its debt - to continue to be pressured. Raising money has become more expensive, while bad credit means the lender is not collecting as much in its portfolio. SHARE PERFORMANCE: Sallie Mae's stock lost 24 percent of its value in the first quarter to close March at $15.35.[8] On Wednesday brokerage Morgan Stanley downgraded Sallie Mae "Underweight" from "Equal Weight' citing the "double whammy impact" of the credit crisis and the new student-loan law. Analyst Kenneth Posner projected that Sallie Mae would need to raise $500 million later this year. On February 13, Friedman, Billings, Ramsey had upgraded the company's shares to 'Outperform' from 'Market Perform' and increased its price target by $2 to $25. Analyst Mathew Snowling said he believes that SLM would be the first one to benefit as and when the credit markets show improvement since its 83% of loan portfolio was already federally insured thereby releasing significant earnings leverage.[16] The company wrote off $119 million of loans on a managed basis, up from $98 million the prior year. Loans that the company kept on its books performed much better than loans that it financed off balance sheet, which may signal that SLM Corp keeps better assets for itself and securitizes weaker assets off its balance sheet, said Blake Howells, director of equity research at Becker Capital Management in Portland, Oregon, which owns Sallie Mae shares. "That may be why Sallie Mae is having trouble getting private loans securitized," Howells said. Howells estimates the company can earn about $1.16 a year on a core basis, meaning it trades at about 10 times its estimated earnings. That multiple could rise closer to 15 times when credit markets normalize, Howells said.[13]
The quarterly loss was driven largely by $363 million of unrealized losses on derivatives, which are financial contracts used to hedge against risk. As a bellwether of how well consumers are managing their debt, Sallie Mae's quarterly report contained mixed signs. By various measures, delinquency rates improved on those Sallie Mae loans that are not federally subsidized. As a percentage of its private loans that borrowers are supposed be repaying, delinquencies fell to 7.4 percent as of March 31 from 8.3 percent at the end of last year, Sallie Mae reported.[12] Sallie Mae has suffered since last year from financial losses, a failed buyout and reshuffling of top management. In January, the company said it was becoming more selective about student loans, and stressing the importance of graduation to predict students' likelihood of repaying their debts.[17] Sallie Mae has been pounded by the collapse of a $60-a-share buyout bid for the company and investors' shunning of asset- backed debt, including bonds the company relies on to finance new student loans.[18] Sallie Mae didn't have any first-quarter gains from packaging student loans for investors, compared with a $367.3 million infusion the year before. "The business model is fundamentally broken until they can find out a way to fund the business at economical levels,'' Richard Hofmann, an analyst with CreditSights Inc. in New York, said in an interview.[18] The investment team claimed a new law - the College Cost Reduction Act - materially hurt Sallie Mae's business and gave the investors the right to bail out. The law cut subsidies to student lenders and forced them to accept a greater share of the risk of students missing payments on loans.[8] "New loans are unprofitable and that's not a great business.'' The global credit crunch has raised student-loan makers' financing costs, and they're unable to raise the rates they charge for federally guaranteed loans. Those rates are locked in by the government. Sallie Mae said today that new student loans can be made only at a loss and it's assessing how "best to balance its resources.'' At least 50 lenders have ceased writing some form of student loans as the cost of raising money in the asset-backed market has skyrocketed.[18] The drought in capital markets for student loans may affect the ability of financial institutions to offer federal and non-federal loans, but will likely hit private lenders like Sallie Mae - who rely on the capital market in order to secure loans - the hardest. Though private lenders that issue non-federal loans may tighten credit requirements or completely eliminate loan money given to students at "low-completion rate" schools, Student Financial Aid director Bill Schilling said he does not expect problems for Penn students.[19]
More than 55 lenders who originate 13% of college loans have stopped making loans in recent months. Financial firms say they are leaving the program because subsidy cuts enacted by Congress last year, combined with the credit crunch that has made it costlier for them to sell the loans to investors, have slashed the market's profitability. The departures come at a time when lenders are also tightening their standards for private student loans, a smaller but growing segment of the industry. This doesn't mean funding has dried up, however. The U.S. Department of Education has surveyed schools that could be affected by the exodus and all have found alternative options for their students.[20] The credit crunch plaguing the mortgage industry has affected college lending. Many lenders finance their operations by bundling student loans into securities, similar to the mortgage funding process. These days, investors are demanding an interest rate nearly 1.4 percentage points higher than they did a year ago to buy the student loan-backed securities, experts said.[20]
Like much of the student lending industry, Sallie Mae has also been caught up in the credit market distress of recent months. Similar to residential mortgages, student loans are commonly packaged into securities and sold to investors.[7] NEW YORK (Reuters) - Sallie Mae (SLM.N), the largest U.S. student loan company, posted a first-quarter net loss on Wednesday and said it cannot continue lending at a profit amid the credit crunch.[13] NEW YORK (Reuters) - Sallie Mae, (SLM.N: Quote, Profile, Research ) the largest U.S. student loan company, posted a first-quarter net loss on Wednesday, hurt by losses on derivatives, and said it cannot continue lending at a profit in the current environment.[14]
Kiplinger's has produced a new educational video on how to pay for college and borrow wisely if you need to. Entitled Borrow Smart, the 24-minute video was underwritten by Sallie Mae, the nation's largest student lender and Discover Student Loans, one of the few lenders that is expanding its student loan business at a time most are pulling back.[21] WASHINGTON -- Sallie Mae, the nation's largest student lender, said Friday it would stop offering lower-cost consolidation loans to college graduates, saying the federally backed business had become unprofitable.[6] Friday, Sallie Mae, the largest student lender in the country, said it was raising fees for processing loans. It will no longer do consolidation loans.[22]
The federal consolidation loans accounted for nearly 70 percent of Sallie Mae's portfolio of government-backed student loans last year.[6] Reston, Va. -based Sallie Mae has suffered since last year from financial losses, a failed buyout and reshuffling of top management. In January, Sallie Mae announced it was cutting back on its core business of making student loans, becoming more selective and stressing the importance of graduation as a predictor of a person's higher earnings potential and likelihood to repay loans.[6] In a report issued yesterday before Sallie Mae's earnings announcement, Morgan Stanley analysts Kenneth A. Posner and Andy Bernard warned that a recession could lead to higher loan losses. Leading Democrats have long favored having the government issue student loans directly rather than subsidizing private lenders such as Sallie Mae, the analysts wrote.[12] Sallie Mae shares have fallen by about 70 percent since the beginning of July. The U.S. House of Representatives is looking at a bill that would allow the Department of Education to buy federally guaranteed student loans from lenders unable to package them into bonds.[13] Turning to a more controversial financial industry bet, describe your interest in Sallie Mae. BC: Everybody knows about the bad news for Sallie Mae, which is the dominant provider and servicer of student loans, both federally guaranteed and private.[23] Last week, Sallie Mae announced it was instituting new fees and was no longer offering refinancings that borrowers use to consolidate multiple student loans at a single interest rate.[12]
Last October, Congress struck again. It passed the College Cost Reduction and Access Act, which cut the interest rate that students pay on federal student loans while also reducing the subsidies that lenders were receiving for consolidation loans and increasing the fees they were paying to the government in order to sell consolidation loans.[9] Analysts said the government's latest student-loan initiatives exacerbate the problems in a business where lenders were being effectively compelled to resist participating in lending. JPM also said it worried SLM could be forced to raise more capital, further diluting its existing holders. Merrill Lynch said that, in the face of the continuing disruption in the student lending market, its 80%-owned Student Loan Corp. (STU) would back away from making loans to students at certain schools, and that it would no longer participate in the federal consolidation loan market.[24] Student Loan Corp, (STU.N), majority owned by Citigroup Inc (C.N), said it was suspending lending at certain schools and withdrawing from the Federal Consolidation Loan market. CIT Group Inc (CIT.N) said earlier this month it was no longer making student loans.[13]
In the latest news affecting the sector, Student Loan Corp. also said Wednesday it will suspend lending at certain schools and exit the federal consolidation loan market.[25]
Nine of the 10 top loan consolidators have left the business since October and all are likely to drop out in the next few months, Kantrowitz said. "They're quite clearly in negative territory, so every time they make a loan, they're losing money.'' Student Loan said it "expects these changes to be temporary and will evaluate returning to these schools and offering federal consolidation loans as student loan market conditions improve.''[26]
Investors aren't buying it. For the first time in 40 years, according to a report from Thomson Financial Services, no student loan bonds were purchased in the first quarter of 2008, leaving banks and other providers unable to raise the necessary money to issue their student debt.[27] WASHINGTON (AP) — Sallie Mae lost $104 million in the first quarter and fell short of Wall Street's expectations amid a severe disruption in the troubled student loan industry.[7] WASHINGTON (AP) - Sallie Mae says it lost $104 million in the first quarter, as the student lending industry experienced a severe downturn.[28]
OVERVIEW: For the Reston, Va. -based student lender commonly known as Sallie Mae, the most significant event of the first quarter was the collapse of the company's proposed $25 billion sale to a team of investors including Bank of America Corp. and JPMorgan Chase & Co.[8] Sallie Mae (SLM.N: Quote, Profile, Research ), the nation's largest student lender, posted a first-quarter net loss of $132.8 million late on Wednesday compared with a profit of $107 million a year ago. Sallie Mae Chief Executive Albert Lord said in a statement: "It has become obvious that we can only meet the enormous student credit demands we are seeing at Sallie Mae if there is a near-term, system-wide liquidity solution." Other major student lenders include Citigroup Inc (C.N: Quote, Profile, Research ), Bank of America Corp (BAC.N: Quote, Profile, Research ) and JPMorgan Chase & Co (JPM.N: Quote, Profile, Research ).[29]
Before Sallie Mae's announcement, a student with a $10,000 loan would be excused of 1.5%, or $150, paid for by Sallie Mae. "This was the biggest, most valuable discount," says Kantrowitz. Students who are heading to college this fall should start shopping around for the remaining lenders, like J.P. Morgan Chase, who still offer to pay this fee.[9] Morgan Stanley downgraded SLM, also known as Sallie Mae, and forecast lower earnings for the nation's largest student lender amid turmoil in the student loan market.[30] Schumer, an influential lawmaker, is often attuned to Wall Street's concerns. Sallie Mae, formally SLM Corp., and the big financial institutions that bundle mortgages and student loans into securities and trade them wield hefty lobbying clout on Capitol Hill. They are urgently asking the government to step in to provide relief. It is not clear exactly what form the aid will take, and several proposals are being advanced in the Senate and House.[31] WASHINGTON ' Under pressure from industry, key senators on Tuesday assured Sallie Mae, Wall Street investors and college administrators that the government will help revive the distressed market for securities made from student loans.[31] "We think the market is underestimating the double whammy impact on earnings from reductions in government subsidies and disrupted capital markets," wrote Posner, who downgraded the stock to "Underweight" from "Equal Weight." Although Posner said Sallie Mae operates the leading student loan program in the industry and has a strong management team, he said it's unlikely the company will find a buyer in the near term.[25] JPMorgan said Sallie Mae continued to face challenges following the reduction in government subsidies in the wake of new lending-regulation legislation, as well as the rising losses on student loans amid the capital markets disruption.[24] Difficult market conditions and a new student-loan law that slashed billions of dollars in federal subsidies have already caused Reston, Va. -based Sallie Mae to scale back on making student loans.[25] Consolidation had already become a bad idea for individuals holding onto federal student loans well before Sallie Mae's move. The main incentive behind consolidation was to take your variable rate loans and combine them into one with a fixed rate.[9] Sallie Mae was originally created by the federal government to ensure liquidity in the student loan market. In the late 1990s, its executives, mesmerized by the riches that awaited them on the other side, declared that goal no longer relevant, and successfully parted ways with the federal government.[4]
In the beginning of the year, Sallie Mae said it was becoming more selective about student loans. The company said it would emphasize the importance of graduation to ascertain whether the students are likely to repay their debts.[16] Sallie Mae has been pushing for the Treasury Department to aid the stricken market by buying student loan securities. The company's chief financial officer, John Remondi, warned senators Tuesday of a "shortfall in access to student loans this year."[7]
Lenders are dropping out of the federal student loan program because of the continuing credit crunch on Wall Street. Congress has entered the fray as fears mount that conditions will worsen this summer when a flood of students apply for funding. "The ongoing turmoil in U.S. credit markets. could leave millions of students in a last-minute dash to secure the financial assistance they need to attend college this academic year," Sen. Christopher Dodd, D. -Conn, head of the Senate Banking Committee, said at a hearing Tuesday.[20] Interest rates on private loans are also on the rise. Another troubling trend: the growing number of schools participating in the government's direct loan program, in which students borrow directly from the U.S. Of 5,200 schools that rely on federal financial aid, 1,150 are in the program--50 more than just a couple months ago. These universities are moving out of the Federal Family Education Loan program, as the credit crunch sucks liquidity from firms providing loans.[27] Lenders of private school loans not backed by the government are hiking interest rates. They might deny loans to students at community college and for-profit colleges as too risky, according to some experts.[22]
The government sets the interest rate, currently 6.8%, and Stafford loans are not subject to credit checks. Most students take it for granted that they'll receive the financing. That might not be the case in the coming months as lenders' profits are increasingly squeezed.[20]
Student loans are usually packaged into securities. Adding to its woes, the government recently introduced a new law that reduced government subsidies for federally guaranteed loans, with interest rates capped at 6.8%.[16] Interest rates on federally guaranteed loans are capped at 6.8 percent, unlike private student loans -- whose rates are unregulated and can reach as high as 20 percent.[5]
NEW PALTZ The mortgage crisis is spilling into the student loan market, potentially forcing students and families to pay higher interest rates or even get rejected for loans for the fall.[22] Core earnings exclude treatment for student loans bundled together as securities and derivatives, the complex financial instruments used as a hedge against interest rate swings.[7]
GAAP net interest income was $276 million for the 2008 first quarter, compared to $414 million in the first-quarter 2007. FFELP Stafford and Other Student Loans at the end of the first quarter were $464.476 million, while they were $450.76 million at the end of the same period last year.[16] The company also said it originated more than $8.7 billion in student loans during the first-quarter 2008, vs. $8 billion in the first quarter of last year.[32] In the first quarter, $8.4 billion in securities backed by student loans were issued, down more than 60 percent from $21.7 billion a year earlier, according to the American Securitization Forum, an industry group.[7]
The major federal student loan program provides an estimated $50 billion in loans to 6.4 million students each academic year.[5] As of April 4, 25 firms operating under the Federal Family Education Loan program have withdrawn or suspended new loan origination, taking about $6 billion with them, according to the Department of Education. "The markets are in disarray so much that they've thrown out the dog with the baby and the bathwater," says Brett Lief, president of the National Council of Higher Education Loan Programs, "These student loans are a good asset. Most of them are going to get a degree and better employment.[27] Over the past few months, Thompson said banks have also begun to pull out of the Federal Family Education Loan Program, which partners private and public lenders to provide student loans.[33] In response to the national credit crisis, banks and private lenders across the country have been cutting or eliminating student loan programs, creating a shortage of available funds.[19]
Borrowers will have to pay the price. Former students who want to consolidate their loans can now only turn to the government and a small pool of lenders. Those heading to college are in an even more compromising position. Faced with the rising costs of college - the average cost of a four-year private college in 2007-08 was up by 5.9% from the previous year to $32,307; public college costs rose by 5.9% to $13,589 for in-state students and $24,044 for out of state students, a 5.4% increase, according to the College Board - and a string of lenders offering less financial support to incoming college students are faced with fewer options to help them afford college.[9] Lawmakers, meanwhile, have introduced bills that would allow federal officials to inject money into the market and purchase debt from lenders, among other measures. It would also raise the loan limits by $2,000 a year to reduce students' need for costlier private loans.[20] Finance professor Richard Marston cautioned that a credit crunch could potentially create a bigger problem than anticipated. "I suspect many Penn families will find it difficult to get private loans for next year's tuition," he said. He added that though it would not be "impossible for a family that searches widely for funding" to get money for student loans, problems in the credit market will also have repercussions in the home equity market, posing a "serious financial problem for Penn's families."[19]
Student loan provider Sallie Mae SLM on late Thursday said it swung to a first-quarter loss, due to writedowns to the value of derivative holdings amid the credit crunch.[32] In a letter sent to colleges, Sallie Mae, formally known as SLM Corp., said it would concentrate instead on making new loans to students entering college.[6]
Excluding $103 million in nonrecurring items, the core earnings amounted to 48 cents a share. Sameer Gokhale, an analyst with Keefe, Bruyette & Woods Inc. in New York, said Sallie Mae had a lower loan-loss provision than in the 2007 fourth quarter, better expense control and faster loan growth than he expected.[18] Sallie Mae, formally known as SLM Corp, posted a first-quarter net loss attributable to common shareholders of $132.8 million, or 28 cents a share, compared with net income of $107 million, or 26 cents a share, in the same quarter last year.[14] SAN FRANCISCO, Apr. 16, 2008 (Thomson Financial delivered by Newstex) -- SLM Corp., commonly known as Sallie Mae (NYSE:SLM), late Wednesday reported first-quarter adjusted income of $188 million, or 34 cents a share, versus adjusted earnings of $251 million, or 57 cents a share, last year.[15]
SLM, known as Sallie Mae, recorded a first-quarter net loss of $103.8 million, or 28 cents a share, compared with net income of $116.2 million, or 26 cents a share, a year earlier.[18]
Sallie Mae's shares, which have dropped from a peak of $58 per share last summer, fell $1.18 on Wednesday, or 6.8 percent, to close at $16.26. In after-hours trading, they rose 39 cents, or 2.4 percent, to $16.65. The results were better than anticipated, said Sameer Gokhale, an analyst with Keefe, Bruyette & Woods Inc. "Expectations were already fairly low, given all the concerns that investors had about the company," he said Wednesday evening.[7] Shares of SLM, commonly known as Sallie Mae, slipped 82 cents, or 4.7 percent, to $16.62. Morgan Stanley analyst Kenneth A. Posner expects Sallie Mae to cut its outlook when it reports first-quarter results after Wednesday's market close.[25]
A year ago, Sallie Mae accepted a $25.3 billion buyout offer from J.C. Flowers & Co., Bank of America Corp. and JPMorgan Chase & Co. The deal fell apart after Congress passed, and President George W. Bush signed, a measure cutting subsidies to student- loan providers. Flowers withdrew its offer, saying the lower government backing would materially harm Sallie Mae's profitability. [18] The company made $4.8 billion in federal loan consolidations in 2006, the Web site said, following Sallie Mae at $20 billion and Lincoln, Neb. -based Nelnet Inc. at $4.9 billion.[26] Citigroup will also stop issuing federal consolidation loans, which refinance outstanding student debt into a single loan, following Sallie Mae's decision last week to cease doing so.[7] IN YET ANOTHER signal that the credit crisis continues to take its toll, Sallie Mae, the nation's largest student-loan lender, said it will stop offering federal consolidation loans and cease paying loan-origination fees on Stafford loans. The move echoes that of other top student-loan lenders who've been squeezed by both the credit crunch and a series of legislative moves that have left lenders to deal with shrinking profits.[9] Consolidation loans became too expensive for lenders. While Sallie Mae's decision to cease offering consolidation loans may seem like bad news for borrowers, it's actually not as grim as it appears.[9]
Then again, "The banks you might have gone to last fall might not be offering that loan or it might be more expensive." Worries grew when Sallie Mae (nyse: SLM - news - people ), the industry's largest lender, scaled back its services.[27]
Josh Smith is currently the holder of student loan debt which had been confused for a home mortgage by experienced bankers. He has been to hell and back with Sallie Mae and thus learned a significant deal about the student loan industry.[10] You're not alone in your confusion about student loans. In Sallie Mae's 2007 survey of parents of college-bound freshman, one-third of those interviewed said they needed basic information about loans and payment plans.[21] Sallie Mae could be well positioned in the student loan market long-term because so many other competitors are scaling back or pulling out.[13]
You're likely to pay the same consolidation rates you'd pay if you did so with Sallie Mae. Sallie Mae's decision to stop paying the 1.5% loan-origination fee on both subsidized and unsubsidized Stafford loans given to students after May 2 wipes away the most common discount offered to college students.[9] Sallie Mae said in the letter to colleges that federal loan consolidation, used by graduates to combine several federal loans into one to secure a lower interest rate and monthly payments, now "generates a negative return and, therefore, is no longer economically viable."[6] There's a very simple reason why Sallie Mae, like other lenders, walked away from consolidation loans: They aren't very profitable. Typically, these loans command interest rates that are 75 basis points lower than the rates offered on Stafford and Plus loans, explains Kantrowitz.[9]
In early 2006, lenders further soured on loan consolidation. That year, the Deficit Reduction Act lowered borrowers' interest rates, thereby reducing the amount of money lenders could make off of these loans even more.[9]
Introduced in the mid-1980s, consolidation loans were once a great way for borrowers to streamline outstanding federal student loans and reduce interest payments. Lenders didn't like these loans because they made less of a profit off of them, says Kantrowitz.[9] New federal legislation, the College Cost Reduction and Access Act, "materially'' cuts the profit margin earned on federal student loans, according to the company.[26] DALLAS (AP) - High fuel costs offset an increase in revenue and pushed the parent of American Airlines, the nation's biggest carrier, to a $328 million loss in the first quarter. LAKE SUCCESS, N.Y. (AP) - Astoria Financial Corp. (nyse: AF - news - people ) said Wednesday its first-quarter profit dropped 19 percent, blaming accelerated loan prepayments.[28] Net interest income was $276.4 million for the 2008 first quarter, compared with $413.8 million in the first quarter of 2007. The Reston, Va. -based educational finance company said its provision for loan losses was $137 million versus $150 million last year.[15] The Reston, Va. -based company, formally SLM Corp., said Wednesday it lost 28 cents a share in the first quarter. That compares with a profit of $116 million, or 26 cents per share, a year earlier.[17] BOSTON (AP) _ Quarterly profits at IBM Corp. leaped 26 percent and blew past analysts' forecasts Wednesday, with U.S. operations showing surprising strength given the faltering economy. The technology company also increased its earnings forecast for the year. In the first quarter, Armonk, N.Y. -based IBM earned $2.32 billion, or $1.65 per share, well ahead of its profit of $1.84 billion, or $1.21 per share, in the same period of 2007.[17] BOSTON (AP) - Quarterly profits at IBM Corp. (nyse: IBM - news - people ) leaped 26 percent and blew past analysts' forecasts Wednesday, with U.S. operations showing surprising strength given the faltering economy. The technology company also increased its earnings forecast for the year. EAST GREENVILLE, Pa. (AP) - Office furniture maker Knoll Inc. said Wednesday its first-quarter profit grew 17 percent due to a decline interest expenses and the number of shares outstanding.[28]
Fort Worth-based AMR was the first major U.S. airline company to report January-March results, and it posted a loss of $1.32 per share compared to a profit of $81 million, or 30 cents per share, in the same period last year.[17]
Student Loan Corp shares added 63 cents to $105, but fell as low as $103.51 earlier in the session. Other student lenders and related companies also declined.[1] The nation's largest student lender originated more than $8.7 billion in student loans during the first-quarter 2008, up from $8.0 billion in the year-ago period.[16] Distress in the $330 billion market for auction-rate securities in recent months ' itself an offshoot of the subprime mortgage crisis ' has caused more than 50 lenders to stop making federally guaranteed student loans, either temporarily or permanently.[31]
The effects of the subprime mortgage meltdown have extended to the student loan market, with recent failures in the auction-rate securities market squeezing dozens of lenders out of federally-backed student loans and making other lenders choosier. An article in the Saturday New York Times explores the effect of this credit crunch on families.[34] As a result of the credit crunch stemming from the subprime mortgage crisis, 46 other student lenders -- accounting for 12 percent of the federally backed student loan market -- have stopped making government guaranteed loans, either temporarily or permanently, in recent months.[6]
There is clearly a bipartisan push in favor of government action in what is becoming a high-profile issue in an election year. Sen. Chris Dodd, D-Conn., the committee's chairman, said he would ask Treasury Secretary Henry Paulson to consider using a Treasury financing agency to put cash in the student market so lenders will make new federally backed loans. Legislation in the House and Senate would give the Education Department temporary authority to buy up loans from student lenders to ensure their access to capital. It is now the cusp of the period in which students headed to college next year must lock in their loans.[31] Ms. Spellings, the department secretary, has said the direct loan program could double the amount of new loans it makes to students, if necessary. Some commercial education companies have already taken steps to ensure that their students can find lenders, in some instances by preparing to make loans themselves. Problems are more likely for those seeking private loans, which do not have any government backing.[34] Several colleges have already signed up for direct lending, with a few large institutions, including Pennsylvania State University, switching to direct lending completely. Secretary of Education Margaret Spellings has said her department has the capability to double the volume of the direct-loan program, if necessary. Mr. Kennedy also asked the council to work with its member institutions to ensure that students are exhausting their federal loan eligibility before taking out private loans.[35] Some members of the U.S. Congress are insisting that there is a crisis unfolding as the number of lenders available to offer private student lending dwindles. Although there is some reason for concern, most students will not have a problem securing loans whether they are federal Stafford loans or private student loans through a lending institution.[36] About 50 lenders, not 50% of the lenders that offer federal student loans, have stopped offering loans. Those 50 represent about 16-17 percent of the loans made in the past year.[3]
Some bankers blame Congress for cutting subsidies to the student loan industry last year. Others point to problems the lenders have selling their student loans to make money. "It's just not profitable" for some banks, said Richard Vonk, president of Key Bank Education Resources.[22] The student lending industry and investors are pressing Congress for help, and Democratic leaders say a potential crisis in access to money for education should be averted by action in the way that the mortgage foreclosure disaster was not. "It is our obligation not to let a single person go" without being able to secure an education loan, Sen. Charles Schumer, D-N.Y., declared at a hearing by the Senate Banking Committee. It would be "unpardonable to let what happened in housing" occur with regard to student loans, he said.[31] During the hearing, Mr. Remondi called on the Bush administration to authorize the Treasury Department's Federal Financing Bank to invest in securities backed by student loans. Such a step, Mr. Remondi said, would send "a signal to the market that the government stands behind this guaranteed asset" and would "hasten a return of investors to this asset class."[4] To alleviate the crunch, Remondi said the Treasury Department's Federal Financing Bank should start purchasing the loans, as it is authorized to do. Not only would this inject liquidity into the market but the government's action would also help restore consumer and investor confidence. Dodd said Tuesday that he would ask Paulson and Federal Reserve Chairman Ben Bernanke to consider using the Federal Financing Bank or other tools to avert a student loan funding crisis.[20]
"If there's no government intervention and no thawing of the capital markets. there will be a mass exit of lenders from the student-loan programs," says Mark Kantrowitz, publisher of FinAid.org, an online source of student financial aid information. "Investor demand is much lower than the supply and that's causing a liquidity crisis in the student loan marketplace," he explains.[9]
One group of students has always had a difficult time securing funding and that group consists of students with bad credit or no credit history at all. The current "crisis" as some are calling it is due to lenders tightening up their lending requirements, standards that they relaxed when the economy was strong. Loose lending practices get everyone into trouble: the student who is unable to pay back his debt and the lender who has to write off bad loans. Although there isn't a "magic bullet" for solving any of life's challenges, students who desire to go to college and are in need of funding still have options available to them.[36] As competition among students for the top jobs has grown, the unpaid internship has trickled down, and permeated a growing majority of professions, so as to become a virtual eligibility requirement for employment after graduation. Unpaid internships require that a student spend a summer, often away from home, working for no income whatsoever - placing a burden on the student to finance their vacation, while simultaneously loosing out on the opportunity to spend the time working for money to help pay their way through college. With the only option being to take a loan to pay for this, students are left with the unpalatable choice of graduating with even more debt (thereby restricting their employment opportunities as Destor points out), or graduating with no "experience" (thereby also restricting employment opportunities). The American Middle Class have an unerring belief in the power of education (college), and hard work (internships) to yield results - so it seems unlikely that the prospects of accruing debt will deter them. Ultimately the realities of debt upon graduation will force them to avoid careers in important sectors: Government, Teaching, Medicine, Small private business.[34] Six figure student loan debt is usually incurred by people who go to private universities. In state students who go to their state supported schools get much better deals. While I wouldn't dare to doubt that it happens, I have a hard time believing that anyone goes 6 figures into debt just to keep pace with global competition because it's likely that the student went to an expensive private university and could have cut spent half the money at a state school.[34]
Namely, if your credit isn't good or you have no credit at all, seeking a co-signer for your private student loan is something you may want to pursue. Granted, you need to depend on the generousity of your parents, a close relative, or a trusted friend, but if they know you and believe that you will repay your debt, then a willing co-signer can spell all the difference for you.[36]
When applying for a private student loan, please note that your credit reports will be obtained by the lender as will your co-signer's reports.[36] Some private lenders have stopped making student loans, but you still have thousands of others to choose from.[21]
Student Loan joined a list of lenders, led by SLM Corp., in tightening loan criteria and exiting the consolidation market, which allows borrowers to combine several loans into a single one charging a lower rate.[26] Student Loan Corp., a lender 80 percent-owned by Citigroup Inc., said today that it was leaving the federal consolidation- business and wouldn't make loans to schools where students had low balances or there were short interest-earning periods.[18] Citigroup Inc.' s Student Loan Corp. said it will suspend lending at schools where the financial return is "unsatisfactory,'' and withdraw from the federal consolidation-loan market, at least for now.[26] Student Loan will stop lending on May 1 at schools where loans with lower balances and shorter interest-earning periods "result in unsatisfactory financial returns,'' the company said.[26]
Citigroup's Student Loan Corp. subsidiary said it will stop issuing certain types of loans and halted lending at some schools.[30]
Lord reiterated that point Wednesday, calling federal intervention the only way to "meet the enormous student credit demands we are seeing." More student loan fallout came Wednesday, as Citigroup Inc.' s said its Student Loan Corp. subsidiary on May 1 will temporarily stop issuing loans to students at schools where profits have not been satisfactory. Citi did not say how many schools fit this description.[7] The Citigroup Inc. subsidiary said starting May 1, it will stop issuing new loans to students at schools were profits have been "unsatisfactory," and would stop issuing federal consolidation loans.[1]
Profit Resolve your problem with executive customer service for your lender. You may be surprised how much clout your local representative has with student loan lenders and the federal student aid ombudsman. Once you put these parties into play you'll likely find that the ball gets rolling much quicker with your current lender. This approach to resolution works best if you are in good standing with the involved lenders, stay tuned for more information on dealing with student loans.[10]
The testimony was submitted for the record at a hearing today on the impact of the credit markets on the availability and cost of federal student loans. CBA President Joe Belew commented, "It is obvious to anyone looking at the student loan market that the risk of a substantial loan access problem exists.[37] Rising capital costs and a federal law that cut subsidies to loan providers prompted the decision, Stamford, Conn. -based Student Loan said today in a statement.[26]
Lenders' costs have risen, reducing the profitability of student loans, the company said.[26]
To address the problem of unacceptably low returns, CBA proposes that various budget cuts made in last year's budget bill, including eliminating the increase in the lender paid origination fee and the reduction in lender yield, be revisited and rolled back. CBA noted in its testimony that loan access problems exist in the non-federal student loan market and also that CBA supports increasing unsubsidized Stafford Loan borrowing limits to make low-cost federally guaranteed loans more widely available to those who need them.[37] The testimony urges immediate action to promote liquidity in the student loan financing markets, but notes that bank lenders' participation in the student loan programs depends on the opportunity to earn an adequate return on student loans.[37]
The final list of available lenders should be on the Student Financial Services Web site around May 1. SFS will contact students whose current lenders have since discontinued their loan programs. These students will have to select new lenders for the coming academic year.[19] Thompson said the Direct Loan Program, which is administered by the U.S. Department of Education, is not expected to be affected by turmoil in financial markets because it obtains funds to loan directly from the federal treasury. About 39 percent of the Bloomington campus' 30,394 undergraduate students this year received federally subsidized loans through private funding sources.[11] We will continue to closely monitor developments there, and should it again develop a competitive edge over the federal program, we will consider returning to private lenders." Both the federal Direct Loan and the privately funded FFELP programs are overseen by the U.S. Department of Education. Both provide what are generally known as Stafford Loans for students and PLUS loans for parents. Eligibility rules and loan amounts are identical under both programs, but repayment plans and loan fees differ somewhat.[11]
"Eighty percent of student loans are made through the private-sector based FFEL Program because students and schools prefer the high quality of service provided by private lenders," Belew said.[37] Student Loan, which is 80 percent-owned by New York-based Citigroup, rose $5.97, or 6 percent, to $110.34 at 10:44 a.m. in New York Stock Exchange composite trading.[26] Sallie Mae declined $1.27, or 7.3 percent, to $16.17 at 4 p.m. in New York Stock Exchange composite trading, before the release of the first-quarter financial report.[18]
The idea that students are benefiting from the new federal guideliness is political rhetoric at best. It translates into students paying more for college, turning more to private lending institutions (B of A and Sallie Mae's product can be as high as 27%), and students are having to scramble to find new lenders.[35] This fall, students on the IU-Bloomington campus will be borrowing directly from the federal treasury instead of Sallie Mae, a private lender, said Roger Thompson, vice provost for enrollment management.[33]
Sallie Mae placed federally guaranteed loans to IU students by drawing funds from private markets.[11] In the end we got all of the private loans away from Sallie Mae and saved close to $300 in monthly payments and countless more over the life of our loan.[10] Sallie Mae set aside $137.3 million for bad loans, down from $150.3 million a year before.[18] Morgan Stanley analyst Kenneth Posner downgraded Sallie Mae on Wednesday citing the "double whammy impact" of the credit crisis and the new student-loan law. He projected that Sallie Mae would need to raise $500 million later this year.[7]
On a GAAP basis, Sallie Mae reported a first-quarter 2008 net loss of $104 million or $0.28 per share, compared to net income of $116 million or $0.26 per share in the 2007 first quarter.[16] The investment team last year offered to buy Sallie Mae for $60 per share.[8]
The stock price started 2007 at $48.80, but began to tumble in October, when Sallie Mae and an investor group led by private-equity firm J.C. Flowers & Co. failed to agree on terms of what originally was to be a $25 billion buyout worth $60 a share.[6] A team of investors including Bank of America Corp. and JPMorgan Chase & Co. proposed a $25 billion bid for Sallie Mae, but the deal collapsed.[25] The company's stock finished Monday's trading at $18.01. In lieu of the deal, Sallie Mae established a $31.3 billion credit line with its banks, but the damage was done.[8]
"Today's environment is the most difficult we have seen in our 35-year history of student lending," CEO Albert Lord said in a company statement. "It has become obvious that we can only meet the enormous student credit demands we are seeing at Sallie Mae if there is a near-term, system-wide liquidity solution."[32] Like much of the student lending industry, Sallie Mae has also been caught up in the credit market distress of recent months.[17]
Sallie Mae's results don't hit the tape until after the close of trading, but investors assaying the rock-strewn landscape that student lending has become aren't waiting for confirmation of their pessimism.[24] Sallie Mae is under pressure from several sides now, and its difficulties threaten to create a full-blown student lending crisis.[14]
Students will still have to fill out a FAFSA form, Thompson said. The only difference will be that they will be borrowing money directly through the Department of Treasury rather than through a lending institution such as Sallie Mae.[33]
I really hope that the "Call Center Drones" don't lose their homes. How is this their fault? I am sure that you work in an industry that perhaps Sallie Mae helped you achieve by loaning you your much needed tuition and or "acceptable college related expenses". The drones you speak of go to work and listen and assist borrowers, parents, financial aid officers, and student achieve their dreams. I know that sounds cheesy, but these drones are doing their job, supporting their families. Without the drones, would students all over the world be able to go to school and achieve whatever their dreams may be.[12] SLM, known as Sallie Mae and based in Reston, Va., said in an April 11 letter to colleges and universities that it was leaving the consolidation business because it "generates a negative return and therefore, is no longer economically viable'' for any provider of federally backed loans.[26] Last week, Sallie Mae said it would stop making consolidation loans, which allow college graduates to combine several loans into one.[18]
I called up the local office and was transferred to the "top" local staffer who listened to my whole story including many lies we were told by Sallie Mae about the consolidation process. After expressing his astonishment he took down my info and shipped me out some forms to allow Jim Jordan to act on my behalf and a questionnaire about our loans and experience.[10]
"Right now every loan we make today, we're making at a loss," testified John Remondi, chief financial officer at Sallie Mae, the nation's largest lender. "Every lender is in this same set of circumstances.[20] We tried again to consolidate my wife's private loans with Wells Fargo, who, just like our federal consolidator, never received a response from Sallie Mae.[10] Tuition costs are rising more rapidly than inflation, requiring larger loan levels overall and more private lending on top of federally guaranteed loans. Sallie'''s position as the low-cost provider may allow it to increase market share ''' in both public and private loans ''' at a greater rate than expected.[23] Students can fill any remaining gaps with private loans, which carry variable interest rates based on the borrower's credit rating.[21] Available to students with exceptional financial need, Perkins loans carry a fixed 5% interest rate.[21]
Since July 1, 2006, all federal loans have been disbursed with a fixed interest rate, thereby stripping away the most cost-saving feature of consolidation.[9] Fixed 8.5% interest rate and the whole host of federal loan benefits, including no collateral.[38]
Open to anyone who is a resident of the 50 United States, District of Columbia or Canada (excluding Quebec), has access to the Internet, and is 13 or older at the time of entry. I am trying to get an equity loan and they are offering me a line of credit as well. If I get the loan I need it to lower my credit card interest rates and there fore consolidate them at a lower rate.[38]
The terms of private loans, like other consumer loans, vary depending on the credit histories of individual applicants and in some cases can top 20 percent. In the last several months, rates on those loans have risen by nearly one percentage point, according to research by Mark Kantrowitz, who publishes the financial aid Web site FinAid.org. Lenders have also tightened their standards, making it costlier for those with weak credit histories to obtain loans. These developments are making financing a college education-- an accomplishment that had already grown more difficult over the past decade (see item 1)--an even bigger challenge for middle-class families in the midst of a recession.[34] Representative George Miller, a California Democrat and chairman of the House education committee, has introduced a measure authorizing the U.S. Education Department to buy loans from lenders who need capital and to raise the annual amount college students can borrow by as much as $2,000. The House is scheduled to debate his proposal tomorrow.[18] Companies including College Loan Corp., CIT Group Inc., NorthStar Education Finance Inc., HSBC Bank USA, M&T; Bank and Zions Bancorp have stopped issuing federally guaranteed student loans in recent weeks.[5] As if paying for college weren't enough of a nightmare these days, the roiled credit markets have made things worse. Now school officials, Congress and--most important--applicants are nervously waiting to see how much money for student loans will be available this summer.[27] The subprime mortgage crisis domino that hit the credit market has shaken the student loan business as well.[5]
There have already been signs recently that the student loan lending business in general and SLM in particular have been suffering some strains.[39] "Anyone familiar with the challenges of running a large-scale student lending operation will doubt whether the Direct Loan program could handle a sudden and dramatic increase in student loan volume.[37] BLOOMINGTON, Ind. -- Indiana University announced today (April 15) that beginning in the fall of 2008, its Bloomington campus will return to using the federal Direct Loan Program as its source for federally backed student loans.[11] WASHINGTON, April 16 (Reuters) - The White House said on Wednesday it supports major provisions of a bill expected to come to a vote on Thursday in the U.S. House of Representatives that aims to stabilize the troubled student loan market. "The administration is committed to ensuring that students and their parents have access to the federal student aid they need to pay for college this fall," said the Bush administration in a statement.[29] The bill would also allow the department to funnel capital to state agencies that could help provide money to colleges looking to fund student loans.[13]
Some lenders have stopped making student loans, but don't worry, there is plenty of money available.[21] Over 50 student lenders, temporarily or permanently, stopped making federally guaranteed student loans.[16] The proposal is similar to legislation, offered last week by Rep. Paul E. Kanjorski of Pennsylvania and Sen. John Kerry of Massachusetts, that would allow banks participating in the Federal Home Loan Bank System to invest in student-loan-related securities. Both plans aim to free up capital for student lenders, which have had a harder time obtaining financing in the securities markets.[4] SLM Corp. swung to a first-quarter loss and warned it can't make profitable loans at this time, prompting the nation's largest student lender to assess its operation and call for a "system-wide liquidity solution."[40] The only way, other than a national initiative for expanding outright grants to college students, is the Direct Loan program, which even THE BUSH WHITE HOUSE BUDGET OFFICE admits is several times more efficient than the needless 3rd party middlemen like SLM Corp, Nelnet, etc.[12]
SLM said it would stop offering low-cost consolidation loans to students and suspend lending at certain schools.[39] Students benefitted tremendously from the benefit packages, origination fee discounts and up-front bonuses offered on consolidation loans through FFELP. Those benefits are, for the most part, gone. And, while you are right that there were those lining their pockets, the most egregious offenses were a direct result of the faillure of the federal government to regulate a federal programunder Democrat and Republican Presidents by the way.[35]
Penn Vice President of Government and Community Affairs Bill Andresen said that Penn's consistent repayment of loans and high graduation rate ensure that lenders will not disappear but added that if things continue to deteriorate, other schools may see a shortage. "With all the tumult in the market these days, it is a little unclear how things will work out," he said. "But it is highly unlikely that any Penn student in the fall that wants a loan will be unable to get one," he said.[19] Moving all student loans to FFEL amounts to big government and no choice for students.[35] Isn't it time you started reaping the benefits of your local congressman's clout? Not yet ready to ask for a letter of recommendation for West Point? Have no fear because if you are the bearer of student loans and your loan company is shafting you, your congressman may be the key to a happy ending.[10]
The $85 billion student loan industry is in turmoil now, and its difficulties threaten to create a full-blown crisis.[13] The $85 billion student loan industry is in turmoil brought on largely by the mortgage market crisis. Concern has been growing in Congress about the availability of student loans this summer as many young people firm up their finances before heading to university in the autumn.[29]
Student Loan Corp., a subsidiary of Citibank, said it too was getting out of the business of consolidating federally backed student loans, joining a wave of other lenders.[12] Nationwide, more than 30 lenders, including some of the largest ones, have dropped out of the federally subsidized student loan market.[22]
With investors balking at buying student debt, raising cash for the loans has become more difficult, Citi said. Many student lenders package their loans into bonds and sell them to investors.[2] With investors avoiding credit risk, the student loan bond market has shriveled.[2]
The credit crunch has a lot of people concerned that student loans will be difficult to come by.[3]
Ron Kermani, a spokesman with New York state's Higher Education Services Corp., said the state will guarantee subsidized student loans.[22] Senator Chris Dodd recently asked the Fed and the Treasury to inject new capital into the student loan market.[39]
'To rely on the Direct Loan program to meet the needs of borrowers who may suffer loss of access to student loans in coming weeks would be a mistake. This option should be rejected by all.' Joe Belew ARLINGTON, Va., April 15 /PRNewswire-USNewswire/ -- The Consumer Bankers Association submitted testimony today to the Senate Committee on Banking, Housing and Urban Affairs calling for action to avert a student loan access problem in coming months.[37] Belew also expressed concern over the statements of some policymakers suggesting that increased reliance on the Direct Loan program represented a solution to the student loan access problem.[37]
The federal Direct Loan Program will allow students to borrow at a rate of a half percent, Thompson said.[33] More than three in four families who borrow money rely on the federal program, which includes Stafford loans that students take out and PLUS loans for which parents apply.[20]
Thompson said the administration kept students''' best interests in mind during the change from private to federal loan funding. '''We wanted to keep student costs as low as we could,''' he said.[33] Increased borrowing costs, cuts in government subsidies for loans and consolidations, and a lack of investor appetite for securities back by loan assets have made the business unprofitable. "It's not really a surprise that lenders are getting out,'' said Mark Kantrowitz, publisher of finaid.org, a Web site providing information on college finance.[26] Posner said the cuts in government subsidies and the higher cost of financing new loans created a "double whammy impact on earnings.'' He set a price target of $13.[18]
Morgan Stanley today downgraded SLM to Underweight from Overweight, citing the impact on earnings from reduced government subsidies and disrupted capital markets. Morgan Stanley believes the market is underestimating these challenges, and the firm expects losses from student loans to increase further.[39] SLM CFO John Remondi recently told a Senate committee that demand for student loans is beginning to overtake supply. "The gap between available loans and the demand for them could manifest itself as early as May," he said.[39]
Several state lending agencies, including Pennsylvania's, have stopped making student loans as well.[22] The earnings were better than expected, but reinforced the grim outlook for consumer credit that results from Wells Fargo, Washington Mutual and Wachovia have also revealed. Reports from Citigroup and Merrill Lynch later this week are unlikely to brighten the picture. As the housing market crumbles, people are increasingly unable to pay their mortgages or use their home's value to take out lines of credit. Banks say these trends will only worsen as the months wear on _ which means losses expected not just in mortgages, but in all types of lending. JPMorgan said Wednesday it strengthened its reserves for defaulting loans by $2.5 billion, and lost $2.6 billion in value from its portfolio of loans, which include consumer loans as well as loans used to finance leveraged buyouts.[17] Washington As the exodus of lenders from the guaranteed-student-loan program continues, the chairman of the Senate education committee is urging colleges to sign up for direct lending, just in case. In a letter sent today to the American Council on Education, Sen. Edward M. Kennedy, a Democrat of Massachusetts, encouraged colleges to enroll in the direct-loan program "as a backup for their students" in the event that guaranteed loans become less available.[35] More than 1,500 colleges are enrolled in the program; that's about a quarter of the number participating in the Federal Family Education Loan Program. Financial institutions provide the funds for the government-backed loans in the latter program.[20] Lenders drop out of federal college loan program, but money is still available.[20] A growing percentage of loans--24% last year, up from only 6% a decade ago--comes from private and state lenders, the rest from various federal loan programs. Those private lenders are getting tight.[27] To date, more than 50 lenders have either suspended student-loan originations or left the guaranteed-loan program altogether. Those lenders were responsible for originating 13 percent of the Stafford and PLUS loan volume and 67 percent of the consolidation loan volume in the 2006 academic year.[35]
The lenders have been dropping out just as students are dealing with college loan applications for the next academic year.[6] The industry also is still reeling from cuts made last year in subsidies paid to federally guaranteed student lenders, which followed months of scandal involving conflicts of interest and kickbacks among lenders and college officials.[29] Last year, students borrowed $77 billion to pay for higher education, according to a report from the College Board.[27] Anecdotally, from a conversation overheard on the 1 uptown train a few months ago - some people were talking about a medical student who, after seven years of education, had managed to accrue. wait for it. $700,000 of debt.[34] Please email us to report offensive comments. I hope every one of those call center drones loses their home. They can go sleep on the grass at SLM Corp. CEO Albert L. Lord's $30 million, private golf course, Anne Arundel Manor. While there, they might run into members of Congress like Boehner, Enzi, Rick Keller, and Tom Reynolds -- all of whom benefit tremendously by their associations with the student debt industry.[12]
NEW YORK (Associated Press) - Shares of for-profit education companies opened mixed Wednesday, despite a downgrade of SLM Corp. and news that Citigroup will stop lending money to students at certain schools.[30] NEW YORK -- Citigroup will stop lending money to students at certain schools because a new law and turmoil in the bond market have choked the profitability of student lending, the bank said Wednesday.[2]
Posner wrote that Democrats are likely to favor the federal government's direct lending program, which doles out aid directly to students, rather than through the private sector. For the student lending industry, he wrote, "the situation could get worse if Democrats gain the presidency."[7]
Since Feb. 29, more than 130 schools have applied to join the education department's Direct Loan Program, which allows students to borrow directly from the government.[20] Growing student loan debt might make financially riskier career paths like public service and entrepreneurship less attractive for many, an outcome with negative consequences for everyone.[34] In January, the company said it was becoming more selective about student loans.[41] As the macro situation eventually improves, that would provide upside as the charge-off rate declines. Another related point: student loans can'''t be discharged in personal bankruptcy, which drives better recovery in the long-run.[23] U.S. legislators are working on crafting laws to help stabilize the student loan market.[14] "There will probably be a mass exit in the next three to 12 months," said Mark Kantrowitz, publisher of FinAid.org, an online student loan resource.[20] Student Loan is the third-largest consolidator of federally backed loans, according to finaid.org.[26] Student Loan, based in Stamford, Connecticut, said it expects the departures to be temporary.[18] If you have specific loan questions or requests for additional student loan topics please leave a comment below.[10] Congress wants to know if the credit-market squeeze on student loans could make them more expensive and harder for college-bound students to get.[5]
Unsubsidized Stafford loans. Any student who applies for federal financial aid can get one of these loans, regardless of need.[21] Member institutions are the leaders in consumer financial services, including auto finance, home equity lending, card products, education loans, small business services, community development, investments, deposits and delivery. CBA was founded in 1919 and provides leadership, education, research and federal representation on retail banking issues such as privacy, fair lending, and consumer protection legislation/regulation.[37] Chief Financial Officer John Remondi told the U.S. Senate Banking Committee yesterday that education-loan demand "will significantly outstrip supply,'' perhaps as soon as next month. He called on the federal government to make money available for loans.[18] Without the subsidies, issuing loans under federal government programs has become less profitable, if profitable at all.[8] The suspension of the company's participation in the federal consolidation loan program took effect on Friday.[6]
Until recent months, consolidations had been regarded as a highly profitable activity for loan companies because consolidation usually occurs as students enter years of repayment.[38]
Sallie Mae was chosen as IU'''s primary lender four years ago because students weren'''t charged a processing fee, Thompson said.[33] Sallie Mae was chosen from among eight prospective companies on the basis of best overall package of borrower benefits for students. Thompson said one of the major benefits enjoyed by IU students was that Sallie Mae charged them no processing fees.[11] Sallie Mae recently informed the University that, starting in the fall, students would be charged a minimum processing fee of 1 percent or more.[33]
Sallie Mae's research also shows that about 24% of students use credit cards to pay for college tuition. That's expensive.[21] "With the large number of lenders exiting the program," Mr. Andrews and Mr. Feierstein wrote, "Sallie Mae cannot justify subsidizing some students at the expense of others who may be unable to get funds for college."[38]
Shares of SLM Corp. declined Wednesday morning after an analyst downgraded shares of the nation's largest student lender amid more signs that turmoil in the credit market is slipping into the student-loan market. [25] Sandler O'Neill & Partners analyst Michael Taiano estimates 40 lenders have exited the government-backed student lending business.[8] "We are continuing to see signs that some major private lenders may be forced to cut back on the amount of funding available for lending in the upcoming months," Thompson said. "We want to be sure that our students are protected from this situation."[11] The lending community promotes free enterprise, which is supposed to encourage competition, then for years they lobby Congress and bribe schools in an attempt to kill off the competition of Direct Lending. Then their precious corporate welfare is cut and they go on strike, then cry foul when Direct Lending readily available to help students is offered as a solution.[35] Secretary Spellings is out of touch, if she thinks that Direct Lending can absorb a large number of schools. If this should be forced on all schools, then we will not be able to deliver funds timely to students.[35]
Direct lending is not a solution. This whole debacle started because some felt students were not given freedom of choice. How does Direct Lending give them that freedom? In Direct Lending, there is absolutely no choice and no benefits to the borrowers. Who is going to manage the volume of work this programs creates for the schools? Will we have to hire additional staff? Who do you think is going to pay for that? The students! It is just a vicious cycle.[35]
While a small group of students realize any benefit from the interest rate cuts, we all are going to hurt as another huge government run program is ramrodded to fit where a good existing program once stood.[35] The FFEL program has resulted in the lower default rates, better interest rates, and lower up front costs to students. Now, as others have noted most of these benefits are gone along. From the Dems, we now have interest rates fixed well above what they would be had they remained variable with a cap, allowing for borrowers to benefit from market changes.[35]
Loans disbursed for the 2008-09 academic year carry a fixed 6% interest rate.[21] You quite possibly could be approved for a loan, but you may be able to secure a lower interest rate, saving you thousands of dollars on your loans.[36]
Net interest income from loans was $276.4 million, compared with $413.8 million a year earlier.[18] Sallie reported a $137 million GAAP provision for loan losses, down from the preceding quarter's $574 million and the year-ago quarter's $150 million.[32] Private education loans rose to $443.52 million from $338.42 million.[16]
"The private loan (credit) tests are going to be much tougher now," said Daniel Sistarenik, director of financial aid at SUNY New Paltz.[22] Thanks congress! My loan amounts are going up, I have to sign a new prom note, and now I have to pay fees on my loan meaning I have less money for my educational expenses, meaning private loans. Good luck when all of this crashes and burns in July and August.[35]
About 39 percent of IU-Bloomington students will be affected by the change, according to an IU press release. MacIntyre said, students shouldn'''t notice a change in how they obtain loans. '''It will probably be exactly the same in terms of how money is applied for and accessed,''' MacIntyre said.[33]
In the current market, Sallie Mae said, "loans can only be made at an economic loss."[7] We quickly began working with Wells Fargo to get our loans consolidated and anytime we ran into trouble our Sallie Mae caseworker would work directly with Wells Fargo to figure it out.[10]
Sallie Mae's profit on a "core" basis was 34 cents a share in the first three months of the year.[7] Sallie reported a net loss for the three months ended March 31 of $104 million, or 28 cents a share, compared with a year-ago net profit of $116 million, or 26 cents a share.[15] Sallie reported a GAAP loss of $104 million, or 28 cents a diluted share, vs. a net profit of $116 million, or 26 cents a diluted share, in the year-ago period.[32]
The New York-based bank's profit fell 50 percent to $2.37 billion, or 68 cents per share, on $16.9 billion in net revenue. The results would have been even worse, had it not been for a pretax gain of $1.5 billion when JPMorgan sold its shares in Visa Inc., which went public in March.[17]
Analysts polled by Thomson Financial had expected earnings of 40 cents a share on revenue of $893.2 million.[32] On average, nine analysts polled by First Call/Thomson Financial expected earnings of $0.40 per share.[16] The Reston, Virginia-based company reported 'core earnings' net income of $188 million or $0.34 per share for the first quarter.[16] DALLAS (AP) _ Whipsawed by high fuel costs and bad weather, American Airlines' parent company lost $328 million in the first quarter, and then things really turned ugly. American, the nation's largest carrier, says it began the new quarter this month by losing tens of millions more when much of its fleet was grounded for safety inspections. It warns that costs will rise the rest of this year, even for things other than fuel.[17] The company had losses of $272.8 million on derivatives and hedging in the first quarter, compared with $357 million a year earlier.[18]
Core earnings were $188.3 million, compared with $251.2 million, or 57 cents a share, a year earlier. [18] Excluding non-recurring items of $21 million of restructuring expenses and an $82 million acceleration of premium amortization expense, adjusted earnings were $254 million, or 48 cents a share.[15]
SLM closed Wednesday's regular trade at $16.26, down $1.18 or 6.77%, on 24.69 million shares.[16] SLM shares fell $1.27, or 7.3 percent to $16.17 in afternoon trading.[1]
Sallie Mae's shares closed nearly 7 percent lower on Wednesday before the results came out.[13] The company has plunged 71 percent in 12 months. Morgan Stanley analyst Kenneth Posner today lowered his rating of Sallie Mae to "underweight'' from "equal weight.''[18] The Reston, Va., company, known as Sallie Mae, said tightened credit markets have "dramatically" increased the cost of funds.[40]
The seize-up of credit markets is obviously a problem for the company. BC: They clearly need well-functioning credit markets to fund their business and will be crippled if credit spreads remain wide or if loan charge-offs go to Depression levels.[23] April 16 (Bloomberg) -- SLM Corp., the largest U.S. student- loan provider, recorded its third consecutive quarterly deficit as gains from selling loans to investors dried up. The company said its new loans are unprofitable.[18] NEW YORK (AP) _ JPMorgan Chase & Co., which recently scooped up the toppling investment bank Bear Stearns Cos., said Wednesday that problems with mortgages and other loans cut its own first-quarter profit in half.[17] In the testimony, CBA notes, "Last summer, before a yield cut of 0.55% on Stafford Loans, a doubling of the lender paid origination fee, and a more than 0.70% rise in debt costs, a typical FFEL lender was able to earn a net return before taxes of 1.12%. That return now is approximately a negative 0.4%."[37] I have a hard time believing that anyone goes 6 figures into debt just to keep pace with global competition because it's likely that the student went to an expensive private university and could have cut spent half the money at a state school.[34] A couple of responses - the first very briefly on the private/public dichotomy. Given that private schools will have larger endowments - usually proportionate to their higher fees - it can often end up being the case that the sum of money a family will have to pay for tuition will be the same, regardless of whether they send their children to college at the local in-state university, or at an out-of-state private university. The second on debt forgiveness. I agree that it's hard to determine who exactly should be deemed eligible - but I should point out that once the decision to forgive debt is made, it should be done fairly.[34]
DL works great, delivering the kind of service to students that you usually wouldn't expect from a government program. It saves taxpayers money in the process. Senator Kennedy's back-up recommendation is only common sense for FFELP schools that lack confidence in their current lenders ability to deliver. [35]
NEW YORK (CNNMoney.com) -- Paying for college is rarely easy, but this year parents and students could have a tougher time securing the necessary financing.[20] At stake is a $60 billion source of federally-backed funding for college and graduate students.[20] With April in full swing, a rising generation of future college and graduate students is combing through financial aid awards and contemplating the five- and six-figure of student debt necessary to becoming marketable in the global economy.[34] The legislation could cause some for-profit colleges to lose their eligibility for federal student aid, the Bush administration said.[4] "Thus far, we have not encountered any situation in which an eligible school did not have access to federal student loans," says Larry Warder, the acting COO. Comforting.[27] Again, the feds pay the interest until repayment begins, six months after the student leaves school.[21] If a college student wants to take an interest in a career, and work towards getting a job, then that should be rewarded. It is simply that the current system is discriminatory.[34]
Sallie Mae said in a letter to colleges and universities that the market is "no longer economically viable.''[18] My wife and I promptly returned the packet to our case worker, who let us know that we should hear back soon. This is where it gets fun and exciting, soon after we began the process, Sallie Mae assigned us a representative who provided a direct line for the consolidation information to be routed through.[10] In yesterday's report, Sallie Mae said it was "still in the preliminary phase of assessing all potential restructuring activities."[12] The switch, Thompson said, is the result of uncertainty in the amount of funding Sallie Mae will be able to provide.[33] There's a limit to how much people will lend to Sallie Mae so we can then turn around and lend it at a loss.[20]
The government has changed reimbursement levels on the loans it guarantees, making that business far less profitable for Sallie. [23] The percentage of private loans in a status called "forbearance" rose to 16.4 percent as of March 31 from 13.9 percent as of Dec. 31. When borrowers put their loans in forbearance, they temporarily suspend making payments but must pay more over the long run.[12] We'''re also modeling a 4% loan charge-off rate for private loans, which is essentially at a recession level forever.[23]
Interest starts accruing as soon as the loan is disbursed, at a fixed rate of 6.8%.[21]
Congress is also doing what it can to ensure that federal loan money does not dry up. Andresen, who represents the University before Congress and the Bush administration, said that "there is clearly a bi-partisan commitment in Congress so that this doesn't become an insurmountable problem." "I get a strong sense from listening to members on both sides of Congress that they are committed to figuring out some way to fix it," he added.[19] State agencies in Iowa, Michigan, Montana and Pennsylvania have suspended college loan programs.[5] I am sorry that you are bitter, maybe you chose the wrong career. Have no fear, call a call center drone, we may just be able to provide you with a college loan to fund whatever career or degree you choose.[12]
"If there is no government intervention or a thawing of the capital markets, by the end of the 2008-09 academic year, I expect there will only be 15 to 25 lenders." Both colleges and the government are getting ready if more lenders pull out.[20] A law enacted last year cut the subsidy that the federal government provides lenders, reducing the margin by as much as 3/4 of a percentage point.[20]
Whirlpool (WHR) has been laboring - it probably goes without saying - with the difficulties of selling new big-box appliances into an indifferent housing market. The final quarter of last year offered some enticing morsels that suggested the manufacturer had effectively stemmed the erosion in market share in its business.[24]
Investors might have perked up, but analysts mostly showed picque. Those holders are singing a few verses of "I'm A Believer" in Wednesday's trading. CSX, which reported results after the close Tuesday, said it figured to post full-year results that would come in near the high end of its guidance of $3.40 to $$3.60 a share.[24] Analysts surveyed by Thomson Financial had expected a loss of $1.34 per share.[17] Analysts polled by Thomson Financial had expected the company to earn 40 cents per share on that basis.[7]
Merrill Lynch downed the stock after the results, effectively saying a 10% haircut an opportunity to sell.) Those analysts acknowledged that the key point of concern - the whopping $4.5 billion in unrealized losses in State Street's portfolio - might turn into realized losses down the road. They said they understood the concerns that State Street might have to follow the lead of some of its fellow financials, and recapitalize its balance sheet. Those analysts said State Street could improve its capital ratio within two or three quarters, and that capital-raising efforts wouldn't be harshly dilutive. Shareholders have signalled they aren't buying the argument. [24] Revenue rose 11 percent to $24.5 billion, better than the $23.7 billion expected by analysts surveyed by Thomson Financial.[17]
The Dow rose more than 250 points as investors shrugged off any concerns about oil passing $115 a barrel for the first time. A market anxious about corporate earnings and their effect on the economy was relieved after JPMorgan Chase & Co., Coca-Cola Co. and Intel Corp. all topped first-quarter projections. [17] NEW YORK (AP) _ Wall Street rallied Wednesday after better-than-expected quarterly results from JPMorgan Chase and two other Dow Jones industrials raised investors' hopes that companies and the economy are indeed recovering from the protracted global credit crisis.[17]
The forecast is for even bigger energy-related increases to come, including the possibility of $4 per gallon gasoline by Memorial Day. Those inflation pressures are occurring just as the economy seems to be sinking into a recession, with consumers cutting back on spending and the housing industry, where all the troubles started, sinking further. That was the somber news from a batch of economic reports released Wednesday that depicted an economy still struggling with multiple problems from a prolonged slump in housing, soaring energy prices, a severe credit crisis and rising unemployment.[17]
Much has been made in the news lately about the current situation with student lending. [36] "Today's environment is the most difficult we have seen in our 35-year history of student lending," Albert L. Lord, the Reston, Va-based company's chief executive, said in a statement.[7] Commenting on the results, Albert L. Lord, chief executive officer said: 'Today's environment is the most difficult we have seen in our 35-year history of student lending.[16]
KG(#5) No one is mandating Direct Lending. DL having the funds available makes them a better option than the Private Lenders who are withholding funds. It's a market adjustment. That doesn't mean that the market hasn't been manipulated to cause such an adjustment, but those sorts of manipulations are as old as the concept of a free market anyway. Full Monty-Pleaseit is the Republican administration that is responsible for this economic disaster. [35] Interesting a search on the Department of Education website and separate google search turns up no information on Direct Lending's default rate.[35]
We have a more expensive Direct Lending program adding on to our ever expanding federal government.[35]
Net interest income is the difference between how much it costs a bank to borrow money and the amount it receives from lending money.[7]
The student-loan provider reported net interest income of $276.4 million, down from $413.8 million a year ago.[7] Sallie shares were falling 4.4% to $15.55 in recent after-hours action.[32]
"Competition among lenders in the private sector served our students well for several years," Thompson said. [11] Some employers offer assistance in finding and paying for rented accommodation. Universities should follow suit, and be ready to keep their dorms open through the summer. Again, if all this is still difficult for employers to afford, then there should be an expansion of short programs that give students some experience in a chosen field, without sacrificing months of earning potential.[34] Tuesday morning, the Senate Banking Committee holds hearings on the impact the credit crunch has had on student borrowing.[27]
Aside from new legislation, investors' aversion to risk has made it hard for lenders to raise money. [8]
SOURCES
1. Sector Snap: Student lenders fall on margin, funding concern | Chron.com - Houston Chronicle
2. Citigroup to stop issuing student consolidation loans | Chron.com - Houston Chronicle
3. Congress holds hearing on student lending industry - WalletPop
4. Sallie Mae Warns That It May Be Unable to Meet Demand for Loans WithoutHelp - Chronicle.com
5. Ahead of the Bell: Student loans
6. Postbulletin.com: Sallie Mae nixes consolidation loans - Mon, Apr 14, 2008
7. The Associated Press: Sallie Mae swings to $104 million loss in 1Q
8. Earnings Preview: Sallie Mae - Forbes.com
9. Sallie Mae Halts Student-Loan Consolidation (Consumer Action: Personal Finance) at SmartMoney.com
10. Use your congressman to resolve student loan problems - WalletPop
11. IU Bloomington campus switching to federal direct loans for 2008-09: IU News Room: Indiana University
12. Sallie Mae Cuts 1,000 Jobs; Posts Quarterly Loss - WashBiz Blog
13. Sallie Mae posts 1st-quarter net loss - washingtonpost.com
14. Sallie Mae posts 1st-quarter net loss | Industries | Financial Services & Real Estate | Reuters
15. Sallie Mae 1Q adjusted profit falls
16. Sallie Mae Posts Q1 Loss; Says Loans Can Only Be Made Now At An Economic Loss - Update [SLM] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
17. Business Highlights | Chron.com - Houston Chronicle
18. Bloomberg.com: Worldwide
19. Credit crisis may hurt student loan industry - News
20. Turmoil in student loans stresses families - Apr. 15, 2008
21. Borrow Smart for College - Kiplinger.com
22. Credit crisis hitting student loan market - RecordOnline.com - The Times Herald Record
23. The Long Case for Sallie Mae - Seeking Alpha
24. Stocks To Watch Today : Sallie Poor Mae, Wringing Whirlpool, State Street Stumbles
25. Out of the Gate: Sallie Mae downgraded by Morgan Stanley - Forbes.com
26. Citigroup will suspend student lending at some schools | APP.com | Asbury Park Press
27. Credit Crunch Goes To College - Forbes.com
28. Earnings roundup: Sallie Mae, AMR - Forbes.com
29. UPDATE 2-W.House backs much of US House student loan bill | Reuters
30. Opening Glance: Education stocks face student loan woes
31. Senators say they won't let student loan market sink | Chron.com - Houston Chronicle
32. Sallie Swings to a Loss | Financial Services | SLM - TheStreet.com
33. IU switches to federal direct loans
34. TPMCafe | Talking Points Memo | A Tougher Market for Student Loans
35. Kennedy Urges Colleges to Prepare for Crisis by Signing Up for DirectLending - Chronicle.com
36. Your Bad Credit And Private Student Loans | SayCampusLife -- Campus News Events
37. CBA Says Federal Action is Needed Now to Avert Loan Access Problem
38. FAP777: Birthday, Sallie Mae Student Loan Consolidation, HELOC | BostonNOW
39. Earnings Preview: Sallie Mae - Seeking Alpha
40. Free Preview - WSJ.com
41. Wire Business Briefs - 04/17 | Business | PE.com | Southern California News | News for Inland Southern California
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