Seen in the Wall Street Journal (subscriber link):
SLM Corp. swung to a first-quarter loss and warned it can’t make profitable loans at this time, prompting the nation’s largest student lender to assess its operation and call for a “system-wide liquidity solution.”
The credit crunch and recent cuts in federal subsidies have led some lenders to stop making federal student loans and tighten their credit standards on private student loans.
“Today’s environment is the most difficult we have seen in our 35-year history of student lending,” Chief Executive Albert Lord wrote. “It has become obvious that we can only meet the enormous student credit demands we are seeing at Sallie Mae if there is a near-term, system-wide liquidity solution.”
In Senate testimony Tuesday, Senate Banking Committee Chairman Chris Dodd said he would send a letter to Treasury Secretary Henry Paulson to direct the Federal Financing Bank to purchase participation interest in pools of new student loans backed by the government.
Hmmmm…. student loan providers pulling out of the market, interest rates on loans high, and the echo of the baby boom graduating high school, all at the same time.
This can’t be good, can it?