Thursday, April 17, 2008

No More Private Loans From B of A

CHARLOTTE, N.C.—Bank of America said Thursday it plans to stop issuing "private" student loans -- or loans not backed by the government -- because the turmoil in the bond market has made the debt hard to sell to investors.

The Charlotte, N.C.-based bank plans to continue issuing government-backed student loans.

Most loans in the $85 billion student loan industry are issued through government programs. The federal government grants subsidies to lenders under these programs and reimburses banks for most losses when students default on their loans.

Because the cost to attend college has grown and the size of the government-backed student lending programs is capped, a "private" student loan industry -- in which banks lend money directly to students without the aid of any government program -- has sprouted. - Boston Globe

Silly Bank of America

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