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Loans News Tuesday 28th August 2007
Congress to reshape student loans industryWith the credit markets in turmoil following the current subprime crisis, some financial industry groups have revealed that loan financing costs are rocketing and some new student loan financing has been brought to a standstill.Talks begin next week in Congress to decide a new package of reforms to be sent to President Bush involving the reshaping of the multibillion dollar industry. This follows a string of scandals and conflicts of interest between college officials and lenders. A major point in the reforms is likely to involve cutting the subsidies the government pays to lenders of federally guaranteed student loans. Both the President and the Democrat controlled congress are in unusual agreement on the cuts. Large lenders often deal with Wall Street traders to bundle student loans as asset-backed securities. Cuts in subsidies will eat into the profit margins of the lenders and as a result a group comprised of some of the biggest players has formed to plead the lawmakers for leniency concerning any cuts. A total of over $350 billion in student loans have been sold as asset-backed securities in the last 20 years, $79 billion last year alone. Should returns on these securities encounter problems, the funds available for student loans may decrease as investors transfer capital to other areas. Students themselves then may feel the pinch. The agenda for the coming talks does not however, address the growing reliance on these securities by higher education financiers. Other Loans Recent News and ArticlesEverything You Need To Know About Getting A Cash Advance » Release Yourself From The Burden Of Debt » |
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