Student Loan Blog : Federal Financing Bank

Kentucky Lender Puts Brakes on Student Loans to New Borrowers

Student Loan Girl — Mon, 21 Apr 2008 21:50:00 GMT

Citing ongoing fallout from the national capital market crisis, Kentucky officials announced the state’s student loan agency will stop making student loans to first-time borrowers beginning May 1 until it can secure additional financing, according to an article by Nancy C. Rodriguez in the The Courier-Journal (“State to Suspend Student Loans to First-Time Borrowers,” April 18, 2008).

The Kentucky Higher Education Student Loan Corp., also known as The Student Loan People, will continue to make student loans for its returning borrowers based on the availability of funds.

In the meantime, the student loan company has asked the U.S. Treasury to allow the Federal Financing Bank to temporarily help the state fund new student loans until confidence in the market is restored.

A few months ago, the state also announced it would be phasing out three loan-forgiveness programs for health care, education, and public prosecutors due to federal cutbacks and overall market instability.

Share this post: email this | del.icio.us | reddit

Senator Calls on Fed, Treasury to Ensure Families Can Get Student Loans

Student Loan Girl — Thu, 17 Apr 2008 18:16:00 GMT

Senate Banking, Housing and Urban Affairs Committee Chairman Christopher Dodd, D-Conn., called on the Treasury Department and the Federal Reserve on Tuesday to help prevent a collapse of the student loan market, another financial sector hampered by the collapse of the subprime mortgage industry.

To ensure families continue to have access to student loans, Dodd said the Federal Reserve could use existing monetary policy tools to inject liquidity into the struggling student loan industry, according to a CNNMoney.com article. Dodd also suggested that the Treasury could consider tapping into the Federal Financing Bank, which issues loans at favorable rates.

“If the Fed and Treasury can commit $30 billion of taxpayer dollars to enable the takeover of Bear Stearns by JPMorgan Chase, then surely they can step in to enable working families to achieve their dream of a college education for their kids,” Dodd said in a Senate hearing on April 15.

Share this post: email this | del.icio.us | reddit