Some Student-Loan Companies Returning to Marketplace

Many student-loan companies are in the process of assessing the industry rescue plan outlined on Wednesday by Margaret Spellings, Secretary of Education. Several that had initially left the federal loan program, have already come back.

The Bush administration’s plan will offer loan companies two things - low-interest lines of credit and the ability to sell their loans to the government at a rate exceeding their face value. The administration and congress came up with the plan to head off the possibility that a combination of federal subsidy reductions and economic troubles might leave some students unable to find willing lenders.

Before this announcement, nearly 90 student-loan lenders had announced their withdrawal, either in part or in full, from the federal program. Even before the day was over, nonprofit lender NorthStar Education Finance had announced that it would be returning to the program.

In addition to Northstar, both Brazos Group and Graduate Leverage have come back on-line as well. “We’ve definitely changed our mind,” Daniel Thibeault, president of Graduate Leverage told the Chronicle of Higher Education. “In my mind, 90 percent of the lending community couldn’t lend two weeks ago. Now, I don’t see how a significant player could say, ‘I don’t want to lend.’ It’s going to be exciting.”