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, the fourth-largest holder of bonded pupil loans in
the U.S., suspended making new loans after higher
and less federal subsidies cut its profits.

Brazos Higher Education Service throws more than than $15 billion
in federally guaranteed pupil loans, including $7 billion it
permanently financed through the sale of auction-rate
securities. It is among 26 companies that stopped providing
student loans through the Federal Soldier Family Education Loan Program
according to , a pupil fiscal assistance publication.

''We sorrow this determination was necessary,'' Gilbert Murray Watson,
president and main executive director military officer at Waco, Texas-based
Brazos Higher Education Service, said in a statement today. ''We
hope this state of affairs with the working capital marketplaces alterations in the near
future to allow us re-enter student lending.''

More than 10 million pupils have federal loans from
about 2,000 lenders, U.S. Education Secretary
told the House Education and Labor Committee at a hearing on
March 14. She said the Shrub disposal is ready to increase
the volume of direct loans if private pupil loaners who rely
on federal warrants go forth the market.

The president on Sept. Twenty-Seven signed statute law cutting
subsidies to student-loan providers by $20.9 billion over the
next five years, redirecting the money to pupil aid.

Brazos Higher Education Service, a 33-year-old non-profit,
said it will halt making new loans after March 26 through its
affiliates: Brazos River River Student Lending, Academician Finance Corp.,
Educational Support Services Inc. and Acapita. It said it will
honor 2nd and 3rd expenses on loans it made before
March 27.

Exhausted Recognition Lines

Brazos Higher Education Service have exhausted the lines of
credit it traditionally utilizes to fund pupil loans and also can
no longer repackage and sell the loans it do because of lack
of investor demand, according to Ellis Tredway, a company
spokesman.

The company's investing Banks are exploring converting the
auction-rate securities it have sold into a different type of
debt, Tredway said. The marketplace for auction bridge chemical chemical bonds collapsed last
month after coverage companies championship the debt were downgraded
and bankers stopped buying the bonds for their ain business relationships amid
weak investor demand.

Auction-rate enslaveds were supposed to be the cheap
alternative to traditional long-term debt, with involvement rates
reset every 7 to 35 years on long-term debt. Thousands of
auctions have got failed from deficiency of bids, triggering punishment terms
that sometimes raise annualized involvement rates fourfold in one
week.

The norm charge per unit for was 6.56 percentage as of
March 19, after reaching a record 6.89 percentage on Feb. 20,
according to the Securities Industry and Financial Markets
Association. The charge per unit averaged 3.81 percentage during the previous
12 months.

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