US: Largest student lenders halt private, consolidation loan programs

BoAs announcement came only days after the top student lender, Sallie Mae Corporation, reported a first-quarter loss and pulled out of the federal loan consolidation program citing severe credit market deterioration, and Citigroups student loan operations cut funds to students at many less expensive universities.

In all, 57 lenders have announced they are halting various lending operations so far this year. Many other organizations have raised interest rates and implemented restrictions on borrowing standards, to the exclusion of younger, poorer students.

The constriction of student lending will have devastating consequences for millions of students already saddled with tens of thousands of dollars in education debt, while college costs continue to grow and economic prospects deteriorate.

Rising college costs, stagnant government aid, and loosened lending regulation over the past decade precipitated the growth of the private loan industry, to which a growing proportion of the student population turned for college funding.