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Daily Aid 4: Fannie, Freddie, and Student Loans

September 8th, 2008

Daily Aid 4: Fannie, Freddie, and Student Loans

Student Financial Aid News

The big news over the weekend, besides lender My Rich Uncle ceasing to make loans, is the federal bailout of Fannie Mae (ticker: FNM) and Freddie Mac (ticker: FRE), the government sponsored mortgage companies. While this isn’t directly related to student loans, the bailout may help to stabilize part of the housing and mortgage markets, which will in turn help student loan companies securitize their student loans to investors.

If you’re new to the financial aid world, securitization, as we’ve covered on the podcast in the past, is when you bundle up a whole bunch of loans and sell them as a security on financial markets to investors. They are buying, in essence, the future value of the loans (principal plus interest) and you get the principal plus a finder’s fee in the transaction, which you use to make more loans. Banks securitize all kinds of stuff - mortgages, equity, student loans, etc.

If the securitization markets do stabilize and get healthier, it will mean good news for the companies that make student loans, such as the Student Loan Network, Sallie Mae (ticker: SLM), First Marblehead (ticker: FMD), and even state agencies like PHEAA and MEFA. That will mean loans that are more available, especially private student loans, and easier to get.

Scholarship Update

The Balfour Fellowship program was initiated in 1985 and provides financial assistance to full-time students who are enrolled in accredited graduate or professional schools. The fellowhips were established in honor of Lloyd G. Balfour of Sigma Chi Fraternity. Applicants must be initiated members of an NIC, NPC, NALFO, NPHC, or PFA organization who are in good standing. Awards are based upon scholastic achievement (a minimum of a 3.2 GPA or equivalent is required), campus and community involvement and leadership within one’s fraternity/sorority. Requirements (all postmarked by April 15, 2009): * Completed application * Official transcript from your college or universitiy with a minimum 3.2 GPA or equivalent (photocopies are not considered official) * Copy of graduate or professional school acceptance letter.

Details at our free college scholarship search site

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