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Source:  CNBC.com

The House voted on 4/18/08 in favor of an college lending bill 383-27 after tensions mounting that the tightening credit markets, triggered from the subprime mortgage crisis, could limit financial aid for students.

Statistic:  13 percent of companies in the lending market have recently stopped making loans under the federal student loan program.

The legislation gives the Education Department the ability to buy loans from student lenders which in turn helps lenders have more cash available for lending.

Technorati Profile

Sallie Mae and other CEO’s from lending institutions across the U.S. seem to think there’s a big problem with the collegiate loan industry, in part because they can’t bundle their loans into securities to sell to institutional investors.  Why?  Demand has dried up for these type of investments due to investor fear and a downward trend in investor liquidity.  On Wednesday, Citigroup Inc. said it will temporarily stop issuing loans to students at schools where profits have not been satisfactory.

The fact is, no one will know just how bad the situation is until data will become available in June or July as mentioned in my April 17th post.

Help on the Way?

Congressional leaders and the Bush administration are in a bit of a bind when it comes to helping free up more dollars to lend to College students. Why? It would mean a bail out for the lending institutions who created the mess in the first place. Does this sound familiar? (Search Mortgage lending companies and credit crunch in Google )

What to Look for in the Months Ahead

Some areas of interest in the coming months.

College Enrollment/Attendance Statistics (Has student lending affected enrollment rates)
Student Loan Company Earnings Reports (Are publically traded companies earnings reflected upon the lack of money available?)
College Tuition adjustment (If enrollment starts to cool down, will institutions lower tuition rates?)
Employment Data (If the employment rate starts increasing, that will mean less money for the larger more prestigious Colleges)

John McCain’s speech at a campaign stop in Pittsburgh spoke of wanting the federal government to free people from paying gasoline taxes this summer and also reaffirmed that college students should be able to secure loans this fall.

With nearly two dozen lenders having dropped out of the federally backed student loan program, lawmakers and congressional leaders are beginning to examine what kind of effect this may have on students and lending for college education.

Source: http://www2.tbo.com/content/2008/apr/15/mccain-proposes-break-gas-taxes/?news-politics

Student loan companies are in dire times and banks are tightening their lending standards by raising rates on borrowing, according to a story on the New York Times website.

As the economy worsens, the traditional ways in which to finance College will become less accessible. This proves especially difficult for families already who are already extended with debt.

Although the New York Times gives several examples of families hit hard by tightening lending standards in the banking industry, statistcs won’t be available on how bad the actual lending situation is, until mid- to late June or July.

Source: http://www.nytimes.com/2008/04/12/business/12loan.html?_r=1&ref=education&oref=slogin