The federal government has taken a more active role in student lending and now makes about 93% of all loans.
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Nationwide, college students are using credit cards more and more as a financial crutch, according to student lending giant Sallie Mae.
He explains that Democratic promises of cutting student loan rates in half, or from 6.8% to 3.4%, spooked investors on the student lending business.
Both the House and the Senate have recently passed bills to reform student lending, and observers think a final bill may land on the president's desk in a month.
These pressures affect everything from mortgage lending to student-loan lending.
Collinge founded StudentLoanJustice.org back in 2005 to address predatory student loan lending.
The student-lending industry has recently been under political pressure.
The Student Loan Lending Industry has been under scrutiny and 11 states Attorney Generals have brought suits in the past regarding unscrupulous admissions practices, and lack of transparency from college admissions departments and evidence of corroboration with lenders to increase profits.
Aside from the problems in the bond markets in general and the asset-backed sector in particular, First Marblehead has had to contend with an investigation into the student-lending industry announced by New York in August and questions about the planned acquisition of Sallie Mae.
The totals include bank-issued and retail credit cards, auto loans, consumer-finance loans, home-equity lending and student loans.
Dr. ANDERSON: Well, by reducing the interest rate and easing the repayment terms, this legislation might well make bank lending for student aid less profitable.
The consumer asset backed securities market is a source of liquidity to financial institutions that provide federally guaranteed small business loans and consumer lending such as auto loans, student loans and credit cards.
While no one wants to file for bankruptcy protections on student loans (or any other type of loan for that matter), their removal from student loans has clearly caused a systemically predatory lending system the likes of which this country has never seen, and has also enabled the intolerable tuition inflation already mentioned.
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New and existing home sales are up, as are homeownership, home builder confidence and prices, but most new households are renters, since new potential buyers are kept out of the property market by tight lending standards, uncertain employment and crushing student debts.
Truth in lending requirements don't apply to federal student loans, they're not subject to bankruptcy protection.
An investigation by New York State Attorney General Andrew Cuomo revealed that officials at Columbia University, the University of Texas and the University of Southern California owned stock in a company called Education Lending Group, which owned a company called Student Loan Xpress.
Key lending such as credit cards, car loans and student loans had essentially come to a halt in October, Mr Paulson said.
The fear here is that a Democratic-controlled Congress will again squeeze student lenders and attempt to ramp up competition from the direct lending program.
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