By Brian Jarvis

May 3, 2008

WILKES-BARRE - It used to be that college graduates worried about paying off their student loans, but in recent months even just obtaining those loans has come into jeopardy.

Due to a series of crises in financial markets ranging from home mortgages to corporate bonds, more than 65 student loan providers have stopped or suspended their participation in the Federal Family Education Loan Program since August, according to FinAid.org. Among them was the Pennsylvania Higher Education Assistance Agency.

The problem has become severe enough that U.S. Rep. Paul Kanjorski, D-Nanticoke, on Friday held a roundtable forum at King's College to discuss legislative efforts aimed to offset the damage.

"It's not going to end in a meltdown or a disaster. We have to find a way to do it, and we will," said Kanjorski. "Students' long-term dreams won't be ruined because of the last three and a half months."

At King's, where 36 percent of the student body has taken out federal Parent PLUS loans this year, 90 of those have been negatively impacted, said King's Director of Financial Aid Ellen McGuire.

"It may not seem like a large number, but if enough lenders keep dropping out, it will cause more disruption. Many of our students come from low- to middle-income families," said McGuire. "Lenders are informing us of changes on a weekly basis, and then informing us of changes to the changes, to the point we can't say with certainty the information we provide to parents won't change."

McGuire's concerns were echoed by students, several of whom took part in the forum.

Law school-bound King's senior Stephen Kopko expressed concern that his younger sister might not be able to take advantage of the same Stafford loans that he did, while Luzerne County Community College freshman Caitlin Rowe said she was afraid of going into debt.

"It's frustrating because I'm not familiar with bank jargon. Right now, I only have one loan, but I'm told this is a growing problem, and I may have to use more lenders and then consolidate debt," said Rowe. "But Lord knows when lenders may pull out of the system."

Sallie Mae President C.E. Andrews, however, assured the audience that his company would continue its reputation as the nation's leading provider of student loans.

"In the lending community, there's been a dramatic increase in cost. We have to borrow money in order to lend money, and the cost is going up as we speak," said Andrews. "But our whole business is higher education, and even at a loss we believe in the broader, long-term platform of loan access."

Several pieces of legislation, however, are aimed to bring economic viability back into the student loan business.

H.R. 5723, the Emergency Student Loan Market Liquidity Act, would give the Federal Home Loan Banks emergency authority to provide student loan lenders with access to capital; H.R. 5914, the Student Loan Access Act, would allow the Federal Financing Bank in the Treasury Department to provide aid to loan originators. Kanjorski drafted and introduced both bills.

And just yesterday the U.S. House of Representatives passed H.R. 5715, the Ensuring Continued Access to Student Loans Act drafted by U.S. Rep George Miller, D-Calif., that would increase the amount students can borrow from federal loan programs as well as permit lenders to sell their outstanding federal loans to the Education Department in order to obtain capital for additional loans.

"Since identifying the student loan crunch problem early in 2008, I have led the efforts in Congress to raise awareness and identify solutions," said Kanjorski. "This roundtable has helped me to better understand the importance of ensuring all students have access to the financial aid they need and to make sure loans are available to everyone."