Magazine article Black Issues in Higher Education

Sallie Mae Stops Issuing Consolidation Loans

Magazine article Black Issues in Higher Education

Sallie Mae Stops Issuing Consolidation Loans

Article excerpt

Washington UPDATE: Sallie Mae Stops Issuing Consolidation Loans

College students searching for lower monthly repayments of their student loans face greater uncertainty now that a major financial player has stopped issuing consolidation loans because of concerns with a plan Congress touted as a solution to a fast- growing crisis.

The Student Loan Marketing Association, known as Sallie Mae, will not accept applications from students and recent graduates who want to consolidate multiple education loans into one monthly --and, usually, lower -- repayment plan, said Denise Rossitto, an association spokeswoman.

According to Rossitto, legislation Congress passed this fall and President Bill Clinton signed recently means "more costs" for the agency, making consolidation loans unworkable.

"We have suspended consolidation practices entirely," she said.

Sallie Mae coordinates about 40 percent of all student loans nationwide and 35 percent of consolidation loans, Rossitto said. The agency receives 5,000 to 7,000 consolidation applications a month, she added.

Republicans in Congress had designed the plan to help 80,000 students and recent graduates who already are shut out of consolidation loans because of problems with the Clinton administration's direct lending program. …

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