3 banks give up on student loans

[flashl]

Finance experts say money will still be available for college

ALBANY -- Pointing to what they say is lower profitability and turmoil in financial markets, three large banks, including two with substantial presences in the Capital Region, have pulled out of the federal student loan program.

...

Banks made $119.2 billion in federally backed college loans nationally in 2006. The three banks that are halting their participation issued less than a half a percent of that pool.

HSBC and M&T have numerous branches in the Capital Region, and rank sixth and ninth in the region's market share, with 14 and 15 branches respectively.

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M&T spokesman Phil Hosmer said two factors drove the Buffalo-based bank's decision: difficulty in reselling the loans on the securities market, and reduction from $28 billion to $4 billion in the federal subsidy for the loans. Interest rates, set by the federal government, also are set to fall from 6.8 percent to 3.4 percent in 2011.

"It makes it more difficult to make a profit and reduce your risk," Hosmer said.

Times Union

[Vincardog]

1. "It makes it more difficult to make a profit and reduce your risk," May be that is

because they were designed to help students afford an education.
They were not and are not supposed to be sources of profit for banks.
All banks should get out of student loans, then they could be cheaper for students.