HSBC Bank USA has pulled out of the federal student loan program for the upcoming academic year as the credit crunch puts a crimp on academic lending. In other words there is little profit in it or the loan program would have been accelerated instead. On the other hand students with limited income until graduation were once considered “easy sells” for unsecured credit cards and other loans. Obviously bankers expected life-long loyalty and prompt payback after graduation.

Already, more than 30 nonbank lenders, many of them non-profits, and state loan authorities have said they will stop making loans under the FFEL program, while M&T, HSBC and Twin City are the first big banks to say they are pulling out.

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