Via the Wall Street Journal:

Shares of student lenders jumped Wednesday after an analyst suggested that the industry may not immediately be pushed out of the federal loan origination business, a prospect many had feared for months.

"Although still an uphill battle, the survival of the FFELP program, we believe, is a real possibility," FBR Capital Markets analyst Matt Snowling wrote in a note to investors, referring to the Federal Family Education Loan Program, which allows private lenders to originate government-backed loans for college students. The Obama administration had proposed a plan to bypass the lenders in favor of direct lending, allowing the companies only to service the loans but not originate them.

According to Snowling, the health-care debate has delayed congressional action on the lending legislation. Because schools and students need clarity by the time the new lending season gets under way this winter, the government could be forced to reauthorize the current rules and try again for an overhaul next year. Snowling said legislation to extend the current law could be introduced in both houses as early as Wednesday.

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