Sub-Prime Loan Disaster

Most people have not connected the dots, but the impact of “liar” mortgage loans on college debt will be SIGNIFICANT!!

Here is how I believe we will get there: the mortgage industry truly drives interest rates, and the current chaos in the housing market is generating HIGHER INTEREST RATES!!! In addition to this upward interest rate pressure, there is increasing pressure on lenders to cease “bundling” OR “packaging” loans for resale---------which the mortgage industry calls “securitization.”

Securitization is also becoming very scarce within the college loan industry. Banks are NO LONGER able to package loans and achieve economies-of-scale by bundling and selling college loans.

I believe it is very reasonable to expect college loan interest rates that are TWO PERCENTAGE POINTS HIGHER than what is available today (in some cases OVER 10%)------------prior to college openings in the Fall of 2008.

Just another reason to use strong consumer purchasing principles when choosing a college!!