Bush Signs Legislation to Avert Student Loan Shortage

*Source-Chicago Tribune*

May 8, 2008

President Bush signed legislation designed to ensure that turmoil in the credit markets doesn't cause a shortage in student loans.

The measure is intended to inject liquidity into the student loan market by allowing the U.S. Department of Education to buy federally guaranteed student loans that lenders have not been able to sell to investors.

The legislation addresses a crisis in the market that has forced Citigroup Inc.'s Student Loan Corp., SLM Corp. and about 50 other lenders to stop writing some forms of student loans. They cite increased borrowing costs, cuts in government subsidies and a lack of investor interest in securities backed by loans.

Without government action, demand for federally backed student loans would outstrip supply, industry officials said. An estimated 7 million borrowers will need more than $68 billion worth this academic year.