Student Lender Rally May Be Brief

Private student lender stocks jumped following the federal government's decision last week to bolster the market, but their longer-term prospects are clouded by fretting among legislators and schools that students rely too heavily on unsubsidized lending.

Policy makers and education advocates have thus far offered lukewarm support thus far for the Term Asset-Backed Securities Loan Facility, or TALF, which will provide up to $200 billion to finance the purchase of asset-backed securities secured by a variety of debt, including student loans. The facility, unveiled by theFederal Reserve and Treasury last week, is intended to provide liquidity for private lenders, so that they are freed up to make more loans, benefitting borrowers.

"We hope that this new program will work as intended: To get credit markets flowing again and make loans more accessible and affordable for students and families," committee Chairman George Miller (D., Calif.) said in a statement last week. "We look forward to learning more details about this proposal so we can be assured that it will operate in the best interests of America's college students, their families and taxpayers." ...