Oklahoma lenders leaving the college debt arena
BY SARA PLUMMER - Tulsa World Comments 
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Published: December 28, 2009
Big changes may be coming soon to the student loan industry, and those involved are preparing for the adjustments.
The Obama administration’s plan is to eliminate the Federal Family Education Loan Program, which has provided education loans to students and parents through a public and private partnership with lenders since 1965, if Congress approves. Direct lending from the U.S. Department of Education will take its place.
A trend of lenders departing the student loan business has been happening over the past few years. The Oklahoma Student Loan Authority had 42 banks and credit unions in its lender network in 2007. Now that network number has dwindled to eight.
Why the drop?
The state authority, which was created as a public trust by the Legislature in 1972, processes loan applications and serves as a secondary market to provide funds to borrowers. The authority receives no state-appropriated funds.One reason for the decrease in participating lenders is the enactment of the College Cost Reduction and Access Act of 2007. It reduces the profitability for nonprofit lenders by 1 percent and as much as 2.5 percent for for-profit lenders, said Michael Davis, OSLA vice president.
When lenders began dropping student loan services, emergency legislation — the Ensuring Continued Access to Student Loans Act of 2008 — was enacted. It allowed banks to sell existing student loans to the U.S. Department of Education, freeing up funds so that lenders could continue originating student loans.
"There was a concern that students wouldn’t have access to money for college,” Davis said.
The reduction of lenders was the primary reason Tulsa Community College switched to direct lending in July 2008. TCC and Oklahoma State University are the only colleges in Oklahoma— so far — using direct
Read more: http://newsok.com/state-lenders-leaving-the-college-debt-arena/article/3427884#ixzz0b2BjLTL7
