Obtainer Trainer!

According to a Saturday edition of the Wall Street Journal, which for that very reason, has probably been overlooked, Sallie Mae, the nation's largest student lender, Friday said it would stop offering federal consolidation loans.

The move means that some borrowers will have a harder time finding lenders willing to consolidate any federal loans they may have into a fixed-rate loan.

The credit crunch and recent cuts in federal subsidies have forced a number of student lenders to stop making federal student loans and tighten their credit standards on private student loans. But federal consolidation loans -- which allow borrowers to combine all of their federal loans into one to lock in a fixed interest rate and simplify and reduce monthly payments -- have been among the hardest hit because they're the least profitable loans for lenders, most of whom are now losing money with each consolidation loan they make.

In recent months, eight of the top 10 student lenders that had provided federal consolidation loans have exited the business. Sallie Mae, owned by SLM Corp., is the largest, having accounted for 27.6% of the consolidation-loan volume in fiscal 2006, he says.

Sallie Mae also said it would stop paying the loan-origination fee, currently 1.5%, on behalf of students on Stafford loans for all loans guaranteed after May 2. "With the large number of lenders exiting the program, Sallie Mae cannot justify subsidizing some students at the expense of others who may be unable to get funds for college," the lender noted in an announcement that was sent to some schools.

While many lenders have eliminated or pared back their federal consolidation-loan programs, all borrowers, regardless of where they went to school, can consolidate their loans with the government at www.loanconsolidation.ed.gov.

Because of the Federal Reserve's recent rate cuts, borrowers who haven't already consolidated their variable-rate federal loans should wait until after July 1 since the consolidation rate is likely to drop by at least three percentage points to at least 3.25% -- the biggest drop in rates in the history of the student-loan program.