Student loan 'train wreck' predicted

[marmar]

from AP, via MSNBC:



Sallie boss warns of student loan ‘train wreck’
House OKs measure to get more money to struggling lender

updated 7:14 p.m. ET, Thurs., April. 17, 2008


WASHINGTON - Sallie Mae says it cannot write money-losing student loans indefinitely.

Top executives are holding “daily deliberations” about just how long the nation’s largest student lender can afford to sacrifice its bottom line for the sake of college-bound Americans, Sallie Mae CEO Albert J. Lord said Thursday.

Lord told analysts on an earlier conference call: “We’ve been predicting something of a train wreck” in mid-2008 without prompt changes in a market hit by fallout from the subprime mortgage crisis and cuts last year in federal subsidies to student lenders.

Experts said that, unless the government intervenes or market conditions rapidly improve, Sallie Mae could have no choice but to stop writing new federally backed loans.

House lawmakers on Thursday approved a measure to boost the availability of credit for Sallie Mae and other student lenders, and analysts believe the Treasury department could act as soon as next week. ......(more)

THe complete piece is at: http://www.msnbc.msn.com/id/24167304 /

[KharmaTrain]

1. I Got A Heads Up On This Several Months Ago...

My son is in college and many of his classmates are on one scholarship or another ($25k a year) and the school goes out its way to try to help find grants and loans for all students. Last year I got a letter discussing what the school felt was going to be a big crunch in grants and student loans...and pointed to the then developing sub-prime crisis as one that could drastically hit the college loan market as well. Recently, I heard of one student who had to drop out, mid-term, as his loan default just as his father lost his job and he was forced to take a full-time job at Menards just to support his family.

I still have some friends who graduated in the 70's and 80's still paying off on loans...and loans on loans...surely repaying their tuition many times over...and helping create a generation that has known nothing but debt and maxing out the cards. If Congress wants to help higher education, it should create a new college loan system where there's little or no interest on the loan and a statue of limitation on the terms of the loan...allowing it to be written off then the lender recovers the cost of the loan.

[Johonny]

3. the forget college loans

Congress should make this money a grant not a loan.

[flashl]

2. Sallie Mae and lenders of student loans needs attention, as well as, ....

Record Wait List Led by Amherst, Yale, MIT Brings High Anxiety

April 16 (Bloomberg) -- Anxiety for U.S. high school seniors, always high this time of year, is growing after elite colleges put record numbers of applicants on waiting lists.

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Acceptance at Harvard tougher than ever
BOSTON (Reuters) - Getting into Harvard University, one of America's most selective colleges, became even more difficult this year after a new financial aid offer prompted a record number of applications.
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Harvard's admissions committee cut the acceptance rate to 7.1 percent from 9 percent last year, a record low at the 372-year-old university in Cambridge, Massachusetts, across the Charles River from Boston.

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College frenzy likely to ease as fewer graduate high school
High-school seniors across America are anxiously awaiting the verdicts from the colleges of their choice later this month.
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Projections show that by next year or the year after, the annual number of high-school graduates in the United States will peak at about 2.9 million after a 15-year climb. The number is then expected to decline until about 2015. Most universities expect this to translate into fewer applications and less selectivity, with most students likely finding it easier to get into college.