New law affects families with college bound students
Washington DC -- Signed into law on May 8, 2008 by President Bush was legislation aimed to prevent the shortage in student loans.
To reassure families that student loans would be available in the fall, President Bush made an announcement that the new law passed through the House and Senate. The law will stop lenders from leaving the federally guaranteed loan program. A credit crunch has caused more than 50 loan companies to leave the federal program, a credit crunch that has spread from the housing market to the student-loan industry.
The law passed will permit the secretary of education to buy loans that lenders have fought to sell to investors. The law also states that the Education Department has the go-ahead to forward federal funds to guarantee agencies. Those agencies could then make loans, if necessary, under a "lender of last resort" system. This law should encourage lenders to remain in the federal program.
Permitting the secretary to select emergency lenders of last resort on a college-wide basis, rather than student by student, will ease the process of applying for student loans.
