Struggling Lenders Continue to Suspend Federal and Private Student Loan Programs

PHOENIX, AZ, Aug 19 (MARKET WIRE) --
Despite federal legislation passed in May that was designed to help the
struggling student loan industry, cash-strapped lenders continue to drop
out of the student loan business, leaving families throughout the country
scrambling to find a new student loan provider as 6.7 million
undergraduates prepare to head back to school.

On the heels of its decision in April to stop issuing federal student
loans, the Massachusetts Educational Financing Authority -- the largest
student loan issuer to Massachusetts residents -- suspended its private
student loan program on July 28, citing turmoil in the student loan credit
market. Non-federal private student loans accounted for 80 percent of the
$500 million in student loans MEFA issued last year.

"The whole problem with the capital markets started with mortgages and has
drifted down," said Thomas Graf, executive director of MEFA. "Difficulty
in the capital markets has made it difficult for us to secure funding for
the fall semester."

The suspension of both MEFA's federal and private student loan programs
means that some 40,000 MEFA borrowers will now have to find a new provider
for their student loans with fall tuition bills coming due over the next
few weeks.

"An economy that is in such a tailspin that it affects a critical agency
like MEFA is an economy that scares me," said Kathryn Osmond, executive
director of student financial services at Wellesley College in Wellesley,
Mass.

The government had hoped the Ensuring Continued Access to Student Loans
Act, which was signed into law in May, would be enough to shore up the
student loan market. The bill allows the U.S. Department of Education to
buy federal student loans from private lenders as a means of providing
additional capital for lenders who are no longer able, in the current
credit crunch, to find investors for their student loan portfolios. Yet,
despite the legislation, some of the nation's biggest student loan lenders
have fallen victim to the general economic downturn.

The Brazos Higher Education Authority, the nation's 23rd-largest
originator of federal student loans, had originally pulled out of the
federal student loan market in March, but returned in May after the
passage of the student loan bill, feeling "confident that the short-term
liquidity plan established under the act would provide a way for us to
continue helping students achieve their educational goals," said Murray
Watson, Brazos' president and CEO.

"Unfortunately," Watson continued, "that has not proven to be the case."
On the same day MEFA announced it would stop issuing private student
loans, Brazos again suspended its federal student loan program
indefinitely.

According to the National Association of Student Financial Aid
Administrators (NASFAA), since March, roughly 100 U.S. lenders have
suspended their federal student loan programs, and nearly 30 lenders have
stopped issuing private student loans.

About NextStudent

NextStudent, Federal Lender Code 834051, is dedicated to helping students
and their families find affordable ways to pay for college. NextStudent
offers one-on-one education finance counseling and has a portfolio of
highly competitive education finance products and services, including a
free online scholarship search engine, private student loans, and
information on federally guaranteed parent and student loans, student
loan consolidation programs, and college savings plans.

For more information about NextStudent and its student loan programs,
please visit our website at www.nextstudent.com.

Contact:
Philip J. Tannenbaum
NextStudent
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