Large student agency stops all lending -- a harbinger of doom?


Back on February 16th, Democratic Congressman Paul Kanjorski and 20 other members of his party sent a letter to Treasury Secretary Henry Paulson asking him -- without being specific -- to do something to shore up the student loan market: "We urge you to work without delay ... to address this problem before it significantly decreases access to higher education opportunities for students and their families."

Student lenders have since been insisting that everything is peach in that market but now the first shoe seems to have dropped. The Pennsylvania Higher Education Assistance Agency, one of the largest student lending agencies in the country, has announced that it will stop making federal-guaranteed loans starting in early March.