Lender drops federal student loan program

HARRISBURG, Pa., Feb. 28 (UPI) -- A leading student loan agency in Pennsylvania said Thursday it will stop making federally guaranteed loans.

The Pennsylvania Higher Education Assistance Agency, is among a number of student loan programs to halt at least some of their loans due to a tightening in credit markets.

The agency "serves millions of students and thousands of schools nationally," its Web site says.

Interim Chief Executive James Preston cited "widespread lack of confidence in the capital market … driving up our cost of borrowing and denying us the capital we need to fund new student loans."

The College Loan Corp. of San Diego, Calif., has said it will was abandon the federal loan program, and the Missouri Higher Education Loan Authority has said it will temporarily suspend offers of private loans, The New York Times reported.

The situation has not yet affected students, analysts said.

"This is a crisis more for lending institutions than for students," Luke Swarthout of the United States Public Interest Research Group said.

Executive Director of America's Student Loan Providers Kevin Bruns said, "the sky is not falling."

Other agencies, such as JPMorganChase, is working towards expanding their student loan programs, the report said.