Over $6.7 billion in loans has been lost to students, forcing colleges across the country to approach the Education Department’s Direct Loan Program. The lenders, headed by College Loan corp. and CIT Group Inc., left the market after subsidies were cut by the US and bonds backed by student loans were avoided by investors who have already been hit by the subprime mortgage crisis. The number of schools applying to let students borrow from the Direct Loan system since the end of February is now at 178, over double the 86 schools who applied during all of last year.

The news comes as student borrowing is expected to rise by $4 billion next year as the student population grows and the costs of being a student increases. Anthony Irwin, director of financial-aid services at Northeastern University in Boston, remarked: “Certainly, having students have secure access to funds is of the utmost importance”.