A graduation cap with money symbolizes student loans
A graduation cap with money symbolizes student loans - 
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Tess Vigeland: And now for our weekly update on which student loan companies aren't handing out student loans anymore.

So far this month, nearly 50 student lenders, including HSBC and Washington Mutual, have announced they'll no longer issue federally-backed student loans. This week, the education finance unit of JPMorgan Chase added itself to the list. No more federal consolidation loans after May 1.

Stacey Vanek-Smith tells us it's giving students of the past, present and future a tough lesson in the lending industry.

Stacey Vanek-Smith: Five years ago, Kelly Kuvo decided to go to graduate school to become a social worker, but when she applied for a loan, she realized things had changed a lot since her undergraduate days:

Kelly Kuvo: When I started school in 1989, the tuitions and the federal loans were consistent, but once I went back to graduate school, I realized how insane tuition had become and that I was going to have to apply for private loans.

Kuvo says those private loans have been a nightmare. She currently pays $1,300 a month -- that's more than her rent -- and about half of it goes to interest. Kuvo says her rates are always adjusting upwards and the banks charge enormous fees for late payments. She owes more than $100,000 in private loans.

Kuvo: My lifestyle revolves around making those payments. I don't own a car. I live downtown so that I can take public transportation. I don't have a lot of frills in my life in order to make the payments.

This scenario has become more common. Robert Shireman is the executive director of the Project on Student Debt. He says a lot of students like Kuvo got stuck with overwhelming student loans, because that market started playing fast and loose with credit.

Robert Shireman: Just as in the mortgage market where some kind of questionable subprime loans were packaged up together and sold off, private student loans moved in that direction where we were seeing more students without credit histories or with some negative marks on their credit history getting student loans.

Unlike federal loans, private loans often won't let you defer payment because of unemployment and won't disappear if you declare bankruptcy. The solution has traditionally been consolidation -- that's when you combine your loans and pay a lower interest rate.

SmartMoney's AnnaMaria Andriotis says loan rates will reset July 1 and should hit historic lows, but that doesn't mean people can afford to wait. She says that's because the country's largest student lender, Sallie Mae, has pulled out of the consolidation market, along with dozens of others.

AnnaMaria Andriotis: You're basically stuck in a very difficult situation wondering "Should I wait until July 1, take my chances or should I just consolidate them now through a lender who in July may no longer be offering consolidation loans."

The Project on Student Debt's Robert Shireman says the private loan market will probably shrink and that is a good thing -- except, he says, that it might be difficult for for new students to get loans, especially since their parents might be facing financial difficulties.

Shireman: One of the things we are expecting to see is that more parents will be denied access to the Federal Parent Loan Program because they've had recent delinquencies on mortgages.

About 7 million students will be looking to borrow more than $68 billion in federal loans this year and Shireman says the government needs to step up. The White House has proposed buying billions of dollars in federal student loans from banks and Congress is working to raise limits on federal loans to better match tuitions.

I'm Stacey Vanek-Smith for Marketplace Money.

Follow Stacey Vanek Smith at @svaneksmith