Elizabeth Warren: Why is the Government Backing Expensive Private Student Loans?

[East Coast Pirate]

On Monday, Sen. Elizabeth Warren (D-Mass.), demanded that Ed DeMarco, the head of the Federal Housing Finance Agency (FHFA), justify why his government agency is supporting the super-high-interest rate private students loans that are drowning many Americans in debt.

For the past few years, one of the Federal Home Loan Banks that DeMarco's agency oversees has been funding Sallie Mae, the largest provider of private student loans in the country. Warren wants DeMarco to explain why.

The Federal Home Loan Banks were "intended to bolster the banks' support for the housing market—not to be a backdoor way to subsidize highly-profitable private student lenders," Warren wrote in a letter to DeMarco sent Monday. "It is deeply worrisome that the Federal Home Loan Banks may be undermining their mission by extending billions of dollars in cheap credit to private student lenders."

Sallie Mae has an $8.5 billion credit line from one of the FHL Banks at an interest rate between 0.23 and 0.34 percent. But Sallie Mae charges students taking out loans a rate that is 25 to 40 times higher. Sallie Mae "was able to borrow at less than one-quarter of one percent interest because the government's sponsorship of the Federal Home Loan Banks allows them extraordinarily cheap access to capital," and yet took in about $2.5 billion in student loan interest last year, Warren noted.

More: http://www.motherjones.com/mojo/2013/06/elizabeth-warren-ed-demarco-fhfa-sallie-mae

[pgr]

1. It's pretty obvious why

The banks own the pols. Hopefully they will never get to Warren!

[abelenkpe]

2. Financial aide used to mean exceptional students

Qualified for scholarships and grants. Today that means they qualify for student loans and a lifetime of indentured servitude.

Do Not Let Your Children Take Out Student Loans!

If you do make sure you pay the interest that accumulates before graduation and before they begin working a steady job. Otherwise the amount they take out can quickly rise.

The fact that most cannot send their kids to school without assistance illustrates that higher education is too expensive. As much as I love Elizabeth Warren and support her attempts to call out the injustice of students loan rates what is really needed isn't affordable loans but affordable education much the same way during the housing bubble people didn't really need affordable loans, they needed affordable housing. While I hope she is successful in lowering the rate for current students something needs to be done to make college more affordable. Also really need to do something about the millions of graduates struggling with the outrageous debt. So much to do....

[xtraxritical]

3. Why is Elizabethe the only one to notice?