The mass exit of lenders from the Federal Consolidation Loan market continues, as Student Loan Corp. (SLC) said recently that it will stop making those types of loans and suspend lending at certain schools.

The company blamed two occurrences for its decision: a disruption in the capital markets and what it called unprecedented federal legislation, in the form of the College Cost Reduction and Access Act. The latter, said the company, “has significantly impacted the education finance industry by materially decreasing profit margins earned on federal student loans.”

The changes are effective on May 1. SLC said it is working closely with affected schools and potential borrowers to minimize the disruption. It also said it plans to resume business when economic conditions improve.


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