"distress in the credit markets has caused more than 60 lenders to stop making federally guaranteed student loans, either temporarily or permanently. The exiting lenders, which include college loan agencies in several states, account for an estimated 15 percent of the federally backed student loan market."60 lenders is a fair number, and 15% is quite a chunk.
I remember my student loans deducting 10% right off the top as "administration fees," and no end to extraneous charges when I paid them off early. Still, the money was needed for rent and tuition and such. As mentioned in a recent post, the Fed has intervened by letting these lenders, as well as their subprime brethren, participate in ever expanding TAFs. This is one more indication of a credit environment increasingly on life support.