Late last week Senator John Kerry (D-MA) introduced a bill to amend the Federal Home Loan Bank Act to allow Federal home loan banks to invest surplus funds in student loan securities and make advances for student loan financing. The Emergency Student Loan Market Liquidity Act (S. 2847) appears to be similar to a bill introduced in the House earlier last week by Congressman Paul E. Kanjorski (D-PA) that would also enable Federal Home Loan Banks to invest in student-loan related securities.
"Too many young people, from all walks of life, are either struggling to pay for college or flat out can't afford it," Kerry said. "Those who aren't able to incur the steep costs of a college education are not only losing out on a degree, but setting themselves up to face a lifetime of lost opportunities, as study after study shows college graduates are the most attractive candidates for the fastest-growing and best-paying jobs of tomorrow."
Like Kanjorski, Kerry said that inaction by Federal Reserve Chairman Ben Bernanke to infuse liquidity into the student loan market in the face of a possible credit crunch prompted him to introduce this legislation.
The Federal Home Loan Banks provide stable, low-cost funds to financial institutions for home mortgage, small business, and rural and agricultural loans. They are the primary source of liquidity to approximately 80 percent of the nation's financial institutions, according to Kerry.
"By providing this additional student loan authorization to its members, member institutions will be able to remain active in the student loan marketplace and help students pay for their education," Kerry added. "This legislation is absolutely vital to securing the opportunity of higher education for all who choose to pursue it."
Legislative language on the bill is not yet available. After being introduced, the bill was referred to the Committee on Banking, Housing, and Urban Affairs.
By Justin Draeger
NASFAA Assistant Director for Communications
Posted 04/14/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
