Abstract
Federal credit programs have been established to address specific national problems. This assistance can take the form of direct loans, interest subsidies, the establishment of secondary markets, or loan guarantees. This paper focuses on one federal credit program — the guaranteed student loan program. An error correction model of commercial student loan supply is estimated using the Engle and Granger (1987) two-step procedure. The results indicate that the secondary market is an important determinant of commercial student loan lending and commercial supply is inelastic with respect to the rate of return.
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