...The student loan industry continued to endure stress in the third quarter of 2009. On Sept. 17, 2009, the House of Representatives passed the Student Aid and Fiscal Responsibility Act (SAFRA), which would terminate the Federal Family Education Loan Program (FFELP) by July 1, 2010. The Senate is expected to introduce its own version of the bill later this year. More schools switched to the Federal District Loan program in the quarter, which could be in anticipation of the FFELP termination if SAFRA is enacted. As a result, FFELP disbursements dropped by 17% from the same quarter last year, according to data provided by the Department of Education (ED). Fitch Ratings expects the FFELP market to continue to shrink as more schools make the switch. During the quarter, private student loans also came under scrutiny as the House Judiciary Committee held a hearing on the dischargeability of private student loans in bankruptcy. Further, a bill was introduced in the Senate to allow borrowers to refinance...
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