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Thursday, April 24, 2008

 
As Ye Sow, So Shall Ye Reap

Congress enacted more than one piece of legislation to make student loans less profitable. Guess what happened?

Market leader Sallie Mae says it now loses money on every new federal education loan. Sallie continues to lend in hopes of a change in D.C., or increased investor demand for securitized loans.

Others can't wait. A third of the nation's top 100 lenders to students in 2007 have temporarily suspended new loan originations or exited the business altogether. Citibank subsidiary Student Loan Corporation cited "unprecedented federal legislation" in announcing its recent withdrawal from much of the market.

One party would stand to gain some PR points from this debacle, if it weren't so wussified:

Usually, the law of unintended consequences takes so long to reveal itself that no one remembers the culprits. But the speed at which Congress's student lending changes have gone south is raising political danger for Democrats, if Republicans had the wit to point it out. (They don't; that's why they're Republicans.)

Read the whole thing.

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