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Hedge funds set student loan firms in their sights

Guardian Unlimited – After being accused of precipitating the present financial crisis by short-selling banks, hedge funds are now turning their attention to student loans.

Jim Chanos, founder and president of Kynikos, one of the best known short- selling hedge funds in the US, has student loan companies high on his list to short for the foreseeable future.

‘This industry has much in common with the sub-prime mortgage industry,’ Chanos said. ‘Things do not look very bright.’

They don’t. More than two-thirds of American university students rely on loans to pay for college, but loan applications are being turned down in record numbers as the near collapse of the credit market is making all but the most secure loans impossible to write.

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