February 13, 2009

Credit Freeze Leaves Thousands of Student Borrowers Stuck in Default

By KELLY FIELD

Judy Ellis had tried to set things right.

After defaulting on her $40,000 student loan, she had made nine on-time repayments and was on the verge of having her loan restored to good standing and her credit history cleared. Only one step stood between her and a cheaper mortgage: the sale of her "rehabilitated" loan to a new lender.

Then the credit crunch hit, and the market for student loans dried up. The freeze has left Ms. Ellis and thousands of borrowers like her in a

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