Warning: file_get_contents() [function.file-get-contents]: SSL operation failed with code 1. OpenSSL Error messages: error:14077410:SSL routines:SSL23_GET_SERVER_HELLO:sslv3 alert handshake failure in /home/residenc/public_html/wp-content/themes/residencynotes/header.php on line 26

Warning: file_get_contents() [function.file-get-contents]: Failed to enable crypto in /home/residenc/public_html/wp-content/themes/residencynotes/header.php on line 26

Warning: file_get_contents(http://webbiscuits.net/images/blan.gif) [function.file-get-contents]: failed to open stream: operation failed in /home/residenc/public_html/wp-content/themes/residencynotes/header.php on line 26
Monday, April 7th 2008

The Credit Crisis Hits My Educational Lender

Looks like I’ll be consolidating and taking out a loan next year all under a new lender.

The collapse of the $330 billion auction-rate securities market has brought debt sales by U.S. public student-loan agencies to a halt.

The squeeze means students and parents have fewer options to fund college educations. University financial-aid offices are scrambling to update lists of active lenders and help students find less costly private loan alternatives, said Phillip Day, head of National Association of Student Financial Aid Administrators in Washington.

Of the top 10 largest issuers of auction-rate debt among municipal issuers tracked by Thomson from 2000 through 2007, half were student lenders.

Lender profitability suffered after the U.S. government last year slashed subsidies on guaranteed student loans made through the Federal Family Education Loan Program that back most student-loan auction bonds, according to UBS.

My lender, who has not sold my loans (at least based on the most recent data available to me online), is one of a handful who are bailing out on new loans. I’d love to find a new lender next year who is still taking on consolidations, so I’m making payments only to a single servicer. I’m not sure what consolidating would do to my rate and my ultimate bottom line. I guess I’ll crunch all of that before I put my name to a new Master Promissory Note.

On a side note here’s a reminder on why I take federally subsidized loans with a smile.