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ERIC Number: ED544400
Record Type: Non-Journal
Publication Date: 2008-Nov
Pages: 54
Abstractor: ERIC
Reference Count: N/A
The Toughest Test: The Student Loan Liquidity Crisis of 2007-08 in Texas. A Report to the 81st Regular Session of the Texas Legislature
Webster, Jeff; McQueen, Carla; Creusere, Marlena; Lukens, Leslie
TG (Texas Guaranteed Student Loan Corporation)
The credit market in the United States currently suffers from a rare and serious disruption. Once flowing with liquidity, the creativity and vibrancy of these markets helped fuel an economy that had been the envy of the world. Poor repayment performance in the subprime mortgage market has now reduced the availability of funds needed for other consumer loans, including those for students. As these funds were drying up, Congress reduced subsidies to student lenders in the federally guaranteed student loan program, making student loans less profitable and less attractive to investors. Student lenders have experienced this tightening of credit in varying degrees, with some deciding to exit the market altogether, many continuing to loan to students, and others lending only to borrowers at schools with lower default rates and high average borrower indebtedness. These changes have created anxiety and uncertainty among students and their families as they plan their pathway to college. This paper will outline the important factors of this student loan "credit crunch" with emphasis on its impact on Texas students. Section 1 focuses on the time period directly prior to the "credit crunch," primarily the 2005-2006 time frame, and gives other general background information about student loans. Section 2 discusses the subprime mortgage crisis and how it affected student loans. Section 3 considers the government response to this crisis and how the crisis has affected Texas. A bibliography is included. (Contains 14 figures and 63 footnotes.)
TG (Texas Guaranteed Student Loan Corporation). PO Box 83100, Round Rock, TX 78683. Tel: 800-252-9743; Tel: 512-219-5700; Web site:
Publication Type: Reports - Descriptive
Education Level: Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: TG (Texas Guaranteed Student Loan Corporation)
Identifiers - Location: Texas
Identifiers - Laws, Policies, & Programs: Family Education Loan Program