WASHINGTON - Nonprofit student loan lenders in Kentucky and New Mexico have each privately placed $50 million of short-term debt with their respective states as part of efforts to find short-term liquidity that will allow them to participate in a program run by the Department of Education to assist non-bank lenders in financing student loans.

The transactions, which were announced last week by the Kentucky Higher Education Student Loan Corp. and New Mexico Student Loans, come as a few large nonprofit student lenders - some of which are historically large issuers of tax-exempt debt - have suspended their participation in the Federal Family Education Loan program. Market conditions have made it expensive for the lenders to raise capital and they have been unable to secure crucial bridge loans needed to participate in the DOE's program.

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