The Education Blog

The Bush administration has submitted a written proposal to the Congress seeking to buy student credit loans. By doing so, the administration hopes to provide capital to lenders for new student loans and to make sure that the nation’s credit crunch does not prevent students from borrowing money for receiving a higher education.

The New York Times reports that according to the College Board, last year students and their families borrowed more than $17 billion in private loans and nearly $60 million in federal loans.

The administration’s evident willingness to provide capital to lenders to keep federal loans available is also an example of another way the federal government is expanding its role as guarantor-in-chief to keep the economy on an even keel. The Education Department is also working out the details of a “lender of last resort” program under which students could borrow from guarantee agencies, the nonprofit companies and state agencies that guarantee federal loans on behalf of the federal government.

According to International Herald Tribune, the House bill authorizes the Education Department to buy federally guaranteed loans through July 2009.

The Education Department is also working out the details of a “lender of last resort” program under which students could borrow from guarantee agencies, the nonprofit companies and state agencies that guarantee federal loans on behalf of the U.S. government.

Education Secretary Margaret Spellings is quoted speaking about the importance of buying student loans.

“I want to make double-dog sure that we have the tools necessary. If we don’t need to use them, so be it.”

Photo: © john.sonderman

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