The Pennsylvania Higher Education Assistance Agency will no longer issue federally guaranteed loans, said the agency's president.
Agency President James Preston spoke at a legislative hearing in Harrisburg, Pa., on Tuesday saying that due to bond market turmoil, his agency would temporarily cease activity as a lender in the Federal Family Education Loan Program, which includes Stafford Loans.
The agency adds to the list of recent lenders that have either cut back on their federally funded lending practices or stopped altogether. The College Loan Corporation, Nelnet and Sallie Mae are among recent lenders that have stopped or reduced their federally guaranteed loans to students, said Samara Yudof, a spokeswoman for the Department of Education. All four agencies are among the 20 largest suppliers of federally funded loans.
Education Secretary Margaret Spellings is writing to university presidents, reassuring colleges on the availability of funds.
Yudof said students and their families should continue to look for federally funded options when financing a college education.
"We are completely aware of the uncertainty in the current market, but we here at the Department of Education are going to continue providing students with federal grants and loans," she said.
Assistant Director of Student Financial Services Henry Urick said UT students have nothing to worry about.
"PHEAA lends to a very small amount of students on campus, and when I say a few, I mean like a dozen," he said. "The educational funding opportunities continue to be sufficient if not robust."
Urick said the majority of student loans at UT come from the Texas Guaranteed Student Loan Corporation in Round Rock.
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