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This page provides a list of education lenders who have laid off staff or temporarily suspended or permanently exited one or more student loan programs since August 2007. (Some of these lenders may have exited FFEL or private student loan programs for reasons unrelated to the subprime mortgage credit crisis or the cuts in FFELP lender subsidies.)

Lender Layoffs

The total job loss estimate for the student loan industry is more than 3,513 layoffs. This estimate does not include the National City figures in the totals since those figures are not specific to the student loan division. This estimate understates the actual total due to several lender layoffs for which no total could be obtained.

Lenders laying off staff (including attrition): 17 total

• Brazos Higher Education Service Corporation, Academic Finance Corporation
• College Loan Corporation
• FinanSure
• First Marblehead
• Goal Financial
• Illinois SAC
• Loan to Learn
• MOHELA
• NELNET, Union Bank & Trust
• National City Bank
• National Education
• NextStudent
• PHEAA
• Sallie Mae
• Student Assistance Foundation of Montana
• Student Loan Xpress
• US Education Finance Group

Loan Program Suspensions

The following table lists the 77 education lenders who have exited or suspended their participation in all or part of the federally-guaranteed student loan program (FFELP). The table indicates whether they have suspended participation on all of FFELP (66 lenders, 2 only out of state and 1 just first-time borrowers) or just consolidation loans (11 lenders). It also indicates whether the lender has suspended its private student loan program (23 lenders). (A total of 83 lenders have suspended federal and/or private loan programs.)

Nonprofit state loan agencies are listed with the name of the state in brackets after the name (11 lenders). Five state loan agencies -- PHEAA, NorthStar Guarantee, MEFA, MHESLA and Brazos -- have suspended all FFELP originations.

Rank information is based on FY2006 federal loan volume data and is included only for lenders who have left the federal loan programs. If a lender has suspended only their private loan programs, no rank information is included.

These lenders account for 14.3% of FFEL Stafford and FFEL PLUS loan origination volume and 77.4% of FFEL consolidation volume. These lenders originated more than $7.1 billion in Stafford and PLUS loans to more than 800,000 borrowers and more than $56.0 billion in consolidation loans to more than 1.8 million borrowers in FY2006. So far 9 of the top 10 and 34 of the top 100 consolidation lenders have stopped making consolidation loans, and 25 of the top 100 originators have stopped making Stafford and PLUS loans.

Most of the major lender partners of school as lender schools have ended their participation in the school as lender program, including Sallie Mae, Nelnet, PHEAA, CollegeInvest, Brazos and MHESLA, as well as six other lenders. The 45 affected schools are now looking for new lender partners, but are unlikely to find them. These schools originated $1.7 billion in Stafford loans to more than 200,000 borrowers in FY2006 (3.3% of loan volume) and include 10 of the top 100 Stafford and PLUS loan originators.

If school as lender schools are included in the totals, a grand total of 122 lenders have suspended participation in one or more FFEL loan programs. In FY2006 these lenders originated more than $8.7 billion in Stafford and PLUS loans to more than 1 million borrowers (17.6% of overall loan volume) and more than $56.0 billion in consolidation loans to more than 1.8 million borrowers (77.4% of overall consolidation loan volume). They include 35 of the top 100 originators of Stafford and PLUS loans and 34 of the top 100 originators of Consolidation loans (and 9 of the top 10 consolidators).

Some of the smaller lenders who have exited the student loan programs have reported an inability to liquidate their education loan portfolios even after they have exited.

Lender	What?	FY2006 Federal Rank
		Originations	Consolidations	Holdings
Academic Funding Group / Provincial Bank	FFELP Private	57
Academic Loan Group	FFELP		17	31
Access Group	Consolidation Private	11	12	13
Affinity Direct/Educational Direct	FFELP		19
ALL Student Loan	FFELP Outside California	43	42	42
American Education Services (AES) / PHEAA [Pennsylvania]	FFELP	19	7	7
Ardent Financial	FFELP
Bank of America	Private
Bank of Lake Mills	FFELP	31		80
Bank of Texas	FFELP
Bankers Trust	FFELP
Boeing Credit Union	FFELP
Brazos HESC [Texas] Brazos Student Lending, Academic Finance Corporation, Educational Funding Services, Inc. and Acapita.	FFELP	23	9	4
Capitol Federal Savings, Kansas	FFELP
Capital One/Axiom	FFELP
Citi Student Loan Corporation	Consolidation	2	3	2
College Board	FFELP	25		73
College Loan Corporation	FFELP	8	6	8
College Solutions Network	FFELP	96	78
Collegiate Solutions	FFELP		55	70
CollegeInvest [Colorado]	Consolidation		48	38
Comerica Bank	FFELP Private	37		81
CoreFirst Bank	FFELP
Cornhusker Bank	FFELP
Federal Student Loan Solutions	FFELP
FinanSure	FFELP Private		24	60
First Horizon Bank	FFELP
First Niagara Bank	FFELP
First United Bank	FFELP
FirstBank Southwest	FFELP
Frost National Bank	FFELP	73
GCO-ELF	Consolidation		33	14
Goal Financial	FFELP		5	10
Graduate Leverage	FFELP		14
Heights State Bank	FFELP
HELP Alternative Loans	Private
HSBC Bank USA, NA	FFELP	41	76	53
IEFC	Private
Independence Federal Savings Bank	FFELP	61
Independent Bankers Bank	FFELP
Iowa Student Loan [Iowa]	Consolidation Private		26	25
ISM Education Loans [Indiana]	Consolidation	58	23	35
JPMorgan Chase	Consolidation	7	20	11
K2 Student Loan Solutions	FFELP		37	61
Kansas State Bank of Manhattan	FFELP Private	62
Kentucky Higher Education Student Loan Corporation [Kentucky]	FFELP (just first-time borrowers)	20	41	30
Loan to Learn	Private
Loanster Financial Group LLC	Consolidation
M&T Bank	FFELP	40	97	91
MEFA [Massachusetts]	FFELP	74	72	69
MHESAC [Montana]	Consolidation		34	36
MHESLA [Michigan]	FFELP Private		60	29
MOHELA [Missouri]	Consolidation Private		15	12
National Bank of Andrews	FFELP
National Education	FFELP	26	31	18
National Student Loan Group LLC (NSL Direct)	FFELP		61
NELNET, Union Bank & Trust	Consolidation Private Private Consolidation	16	2	3
NextStudent	FFELP	100	4	45
NHHELCO [New Hampshire]	Private
NorthStar/T.H.E. [Minnesota]	FFELP	13	21	15
PlainsCapital Bank	FFELP	81
Red River Federal Credit Union	FFELP
Sallie Mae	Private (Recourse Loans Only) Consolidation	1	1	1
Security Bank of Kansas City	FFELP
Sovereign Bank	FFELP	82	88	88
Spokane Teachers Credit Union	FFELP
SAF-MT [Montana]	FFELP outside Montana
Student Capital Corporation	FFELP
Student Loan Xpress	FFELP Private	15	8	9
TCF Bank	FFELP	44		98
TD Banknorth	FFELP Private
Texas Independent Bank	FFELP
THE National Bank	FFELP Private
TierOne Bank	FFELP
University of Miami	FFELP	86
Urban Ed Express	FFELP Private
Washington Mutual	FFELP Private	83
West Des Moines State Bank	FFELP Private
Widener University	FFELP
Zions Bank	FFELP Private	61		97

In addition, 5 lenders that provide K-12 loans have suspended those products: GCO-ELF, M&T Bank, Bank of America (PrepGATE), Brazos StudentLoans.com and TERI PLEASE.

Failed Securitizations

Lenders with failed student loan securitization (auction rates) include:

• Brazos
• EdSouth
• College Loan Corporation
• Montana Higher Education Student Assistance Corporation
• Mississippi
• Sallie Mae
• First Marblehead
• Vermont (VSAC)

Chronology of Lender Actions

This table shows a timeline of actions that lenders have taken with regard to the changed environment for lender profitability, such as suspending one or more loan programs, laying off staff, closing servicing centers and suspending loan acquisitions.

Note: Student Loan Xpress and Goal Financial have not returned numerous telephone calls and email messages. The Goal Financial layoff figures are based on the Warn Act Notices.

Loan Program Expansions

A handful of lenders are actively trying to significantly increase their marketshare. This mainly includes lenders that are recent entrants into the student loan programs or who are building an in-house student loan business after dissolving a previous relationship with another lender. An example includes Discover Student Loans.

Pending Legislation

Members of Congress have introduced proactive legislation designed to solve the student loan credit crunch. The bills from the education committees are focused on ensuring that students have continued access to education loans, but do not address the liquidity constraints facing education lenders. The bills from the banking committees are focused on injecting liquidity into the education lenders. Both sets of bills are necessary.

The legislation that ensures continued access to education loans includes:

• Senator Edward M. Kennedy (D-MA), Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, introduced the Strengthening Student Aid for All Act of 2008 (S. 2815) on April 3, 2008.
• Representative George Miller (D-CA-7), Chairman of the House Education and Labor Committee, introduced the Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715) on April 8, 2008. The White House issued a Statement of Administration Policy on April 16, 2008 in support of the bill, but expressed concern about the potential impact on the 90-10 rule. The bill passed the House on April 17, 2008 by a bipartisan vote of 383-27. The bill, with amendments, passed the Senate on April 30, 2008 by unanimous consent. (This replaced Senator Kennedy's original bill.) The bill was signed into law by President Bush on May 7, 2008 (P.L. 110-227).
• Senator Christopher J. Dodd (D-CT) introduced the PLUS Loan Borrower Protection Act of 2008 (S. 2895) on April 21, 2008.

The legislation that injects liquidity into education lenders includes:

• Representative Paul E. Kanjorski (D-PA-11), Chairman of the House Financial Services Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee, introduced the Emergency Student Loan Market Liquidity Act (H.R. 5723) on April 8, 2008.
• Senator John F. Kerry (D-MA) introduced the Emergency Student Loan Market Liquidity Act (S. 2847) on April 10, 2008.
• Representative Paul E. Kanjorski (D-PA-11), Chairman of the House Financial Services Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee, introduced the Student Loan Access Act of 2008 (H.R. 5914) on April 29, 2008.

The following table summarizes the provisions of the Ensuring Continued Access to Student Loans Act of 2008 (P.L. 110-227). The legislation shifts borrowing from private loans to federal loans by increasing the unsubsidized Stafford loan limits for undergraduate students by $2,000 per year and $8,000 in aggregate and by allowing the Parent PLUS loan to be deferred while the student is in school and for a six month grace period after the student graduates or drops below half-time enrollment. Federal loans are less expensive, more available and have better repayment terms than private student loans. This will address the stricter credit underwriting standards on private student loans by allowing borrowers with bad credit to obtain sufficient education financing despite their ineligibility for private student loans. The legislation also remedies flaws in the lender-of-last-resort program and provides some liquidity to the FFEL program by allowing the Direct Loan program to act as a secondary market. All savings from the legislation is directed into the Academic Competitiveness and National SMART grants.

(The final bill did not include Senator Kennedy's proposal to reduce borrowing by the neediest of low income student by allowing the EFC to go negative and by increasing the maximum Pell Grant by up to $750 for these students.)

The legislation can be implemented by the US Department of Education without negotiated rulemaking and without conforming to the Master Calendar deadline dates.

The legislation also included a sense of Congress statement encouraging the Federal Financing Bank, Federal Reserve and Federal Home Loan Banks to inject liquidity into FFELP lenders.

Aside from the provisions that allow the Direct Loan program to act as a secondary market, the legislation does not solve the underlying liquidity constraints facing education lenders. Legislation proposed by the House and Senate banking committees would address this problem by allowing the Federal Home Loan Banks or Federal Financing Bank to inject liquidity into the federally-guaranteed student loan program.

Representative Kanjorski introduced two bills, one using the Federal Home Loan Banks (FHLB) to inject liquidity in the federally-guaranteed student loan program and one using the Federal Financing Bank (FFB). (Senator Kerry's introduced the FHLB bill in the Senate.) The first bill would allow the FHLB to invest surpluses in highly rated student loan securities and student loans and to make advances for student loan financing. Lenders would be allowed to pledge student loans and student loan-related securities as collateral. The bill would expire two years after enactment. The second bill would allow the FFB to invest in FFELP loans and securities collateralized with FFELP loans, and to make advances for financing such loans. It requires the investments to be made at no net cost to the federal government as determined by the Treasury Department and the Office of Management and Budget. The bill would expire on July 1, 2009, but may be extended in one year increments by the Secretary of the Treasury in consultation with the Secretary of Education.

Chairman Dodd's bill would allow borrowers who are 90 or more days late on their mortgage loan payments or for whom foreclosure proceedings have been initiated to remain eligible for the PLUS loan. Currently, the regulations at 34 CFR 682.201(c)(2)(ii) and 34 CFR 685.200(c)(1)(vii)(B) define an adverse credit history as follows:

• 90 or more days delinquent on any debt, or
• having had a write-off of a Title IV debt, default determination, bankruptcy discharge, foreclosure, repossession, tax lien, or wage garnishment in the last 5 years

Margaret Spellings, Secretary of Education, Henry M. Paulson, Secretary of the Treasury, and Jim Nussle, Director of the Office of Management and Budget, sent a joint letter on April 23, 2008 to Senator Dodd indicating that the Federal Financing Bank is not an option for injecting liquidity into the FFEL program. They wrote "The Administration has also considered various means to ensure that necessary short-term liquidity is available for student loan originations for the coming school year. We explored utilizing the Federal Financing Bank (FFB) in this manner but after a thorough analysis, it is clear that the FFB does not have the authority under the Federal Credit Reform Act to purchase, or otherwise participate in, loans to non-Federal borrowers in these circumstances." This means that using the FFB (or the FHLB or Term Securities Lending Facility) will require Congressional action. The letter was supportive of HR 5715 but silent on the prospect of Congressional action to allow education lenders to borrow from the FFB, FHLB or TSLF.

Federal Reserve

The Federal Reserve announced on Friday, May 2, 2008, that it was opening up the Term Securities Lending Facility (TSLF) to accept all AAA-rated ABS as collateral, including federal and private student loans, starting with the May 7, 2008 auction. This will provide some liquidity to education lenders. However, it is only a 28-day facility.

In addition, the Federal Open Market Committee authorized an expansion of the collateral that can be pledged in the Federal Reserve's Schedule 2 Term Securities Lending Facility (TSLF) auctions. Primary dealers may now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial-mortgage-backed securities and agency collateralized mortgage obligations, beginning with the Schedule 2 TSLF auction to be announced on May 7, 2008, and to settle on May 9, 2008. The wider pool of collateral should promote improved financing conditions in a broader range of financial markets. Treasury securities, agency securities, and agency mortgage-backed securities continue to be eligible as collateral in Schedule 1 TSLF auctions.