Welcome! It looks like you're new here. Be sure to subscribe to my RSS feed so you don't miss a thing! Thanks for visiting!

The Consumerist, wrote last week that student loan lender Sallie Mae plans on making fewer loans in the future,

“in the wake of federal legislation last year to reduce subsidies for student lenders,” reports Reuters.

It said the College Cost Reduction and Access Act of 2007,

“could possibly eliminate the profitability of new FFELP (Federal Family Education Loan Program) loan originations, while increasing our risk sharing from our FFELP loan portfolio.”

News Long Island writes that things aren’t looking good for the company in the coming months—although we’d wager the news is bad for students seeking financial aid, too.The year 2008 looks much bleaker for Sallie May after its earnings forecast was lowered by more than 13 percent. That is a huge cut in earnings and the blame goes to a new law in effect which requires subsidies of the federal government to have more cash on hand to counterbalance defaulted loans.
Stock prices had already been falling since last July, so the cut in the forecasted earnings did nothing to help this student loan company. The falling prices initially began when a buyout of $25 million worth of stock fell through last July.

What This Means for the Post-Grad:

Sallie Mae is a very popular student loan consolidation firm but in the wake of this recent news, it might be smartest to look elsewhere for your consolidation. If they’re offering fewer loans to begin with, chances are their outlook on consolidation is pretty grim, too. And if the company as a whole is suffering, it would be a good idea to steer clear; who knows what would happen if the lender you consolidate with went under half-way through your consolidation process (remember: by law, loans can only be consolidated once).

“U.S. student lender Sallie Mae plans loan cuts” [Reuters]
“Sallie May Financial Future: Uncertain” [News Long Island]
“consumerist.com/340954/sallie-mae-will-make-fewer-student-loans-in-2008” [Consumerist]

Technorati Tags: College, debt, Loan Consolidation, Sallie Mae, Student Loans

Popularity: 17% [?]