Student Loan Turmoil Stresses Families

Paying for college is rarely easy, but this year parents and students could have a tougher time securing the necessary financing.

More than 55 lenders who originate 13% of college loans have dropped out of the federal student loan program in recent months, prompting concern that some students may not be able to finance their education. Financial firms say they are leaving because subsidy cuts enacted by Congress last year, combined with the Wall Street credit crunch that has made it costlier for them to sell the loans to investors, have slashed the market's profitability.

The departures come at a time when lenders are also tightening their standards for private student loans, a smaller but growing segment of the industry.

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This article addresses the continued decrease in availability of student loans for those students entering college. Many lenders have left the federal student loan program because of the "continuing credit crunch on Wall Street." Because of the concern and the continued worry that more lenders will drop out of the program, the federal government is willing and prepared to step in and provide assistance where and when it is necessary. This shows that the decline in the United States's economy has not only affected the housing market and other prices, but it has also affected the ability for students to further their education because the finances are not available.

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