Legislation filed by Sen. Kerry on Student Loans

[TayTay]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - April 10, 2008)

By Mr. KERRY:

S. 2847. 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, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs.

Mr. KERRY. Mr. President, to many young people, from all walks of life, are either struggling to pay for college or flat out can't afford it. 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. Greater college access, gained through financial assistance, is critical to making the American dream a reality for all.

Yet prospective student borrowers are about to encounter massive impediments to acquiring quality, affordable private loans . The credit crunch currently impacting the home mortgage sector is set to extend to the student loan marketplace. Without sufficient liquidity in the market, student borrowers will find it harder and harder to find loans for their costs of college next year. According to FinAid.org, student loan originators are increasingly choosing to exit or suspend their participation in all or part of the Federal Family Education Loan Program, FFELP--45 since last August alone.

Unfortunately, however, Federal Reserve Chairman Ben S. Bemanke has indicated that the Federal Reserve is unlikely to take aggressive action at this time to help the student loan marketplace. Therefore, I am seeking to address this significant issue by introducing the Emergency Student Loan Market Liquidity Act.

This legislation will temporarily amend the Federal Home Loan Bank Act to allow the Federal Home Loan Banks to invest surplus funds not needed for advances to its member banks for student loan -related securities. It would also allow the Federal Home Loan Banks to accept student loans and student loan -related securities as collateral. Finally, the bill authorizes each Federal Home loan Bank to provide secured advances to its members to originate student loans or finance student loan -related activities. This will provide funds for banks to help provide critically-needed student loans during these difficult economic times.

The Federal Home Loan Banks are today an essential source of stable, low-cost funds to financial institutions for home mortgage, small business, and rural and agricultural loans . With their members, the Federal Home Loan Banks represent one of the largest sources of home mortgage and community credit. There are twelve Federal Home Loan Banks, including one in Boston, each located in different regions of the country. Their cooperative structure is ideal for serving the system's 8,100 member lenders.

Today, the Federal Home Loan Banks provide billions of dollars of primary liquidity to approximately 80 percent of the Nation's financial institutions. 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.

This legislation is absolutely vital to securing the opportunity of higher education for all who choose to pursue it.

[Mass]

1. After this news this morning, this is more than necessary. This means we will need to find a few

more thousand dollars for our son this year.

http://www.bostonnow.com/blogs/financialaidpodcast/2008/04/16/mefa-ends-federal-student-loans-as-of-july-1-2008-0

[TayTay]

2. I am in the same boat

The financial crisis is reaching down into so many aspects of life. People are having trouble getting money in a lot of areas that go far beyond the subprime mortgage field. It's awful.

[beachmom]

3. Wow, good catch by Kerry. I did not know this about the student loan market.

This will be disastrous if not dealt with, not just now, but in the future if less college age kids don't attend due to lack of funds.

Zell Miller, before he lost his mind, set up a Hope Scholarship Fund in Georgia, where if you have a B average or higher, you can go to any Georgia state school virtually free (it's not totally free apparently, but still this is one of the best states in the union for getting a college education).

If Georgia has such a program, why doesn't Mass.?

[sandnsea]

5. Oregon has one for more students

You don't have to have a B average to get help, you just get more if you have a higher GPA. But it also pays less. So maybe we get more kids help, but not as much per kid. Don't know, guessing. Maybe Mass is similar.

But until they show kids exactly what's available, and exactly how to get it, we're still going to have lots of kids fumbling around out there. We just suck at everything I think.

There was a health care special on Frontline last night. Taiwan is doing better than us. :blush:

[YvonneCa]

4. I watched Chris Dodd in committee yesterday...

...discussing this. He was holding his head, as if in pain, as he listened to the testimony on student loan funds/availability. It was clear he understood the ramifications of this.

I'm glad to see Senator Kerry take action on this.

[ladym55]

6. Here's a story from Ohio on the cost of higher education

http://www.ohio.com/news/17589849.html

What Kerry is doing is so very, very important. Sadly it is receiving no coverage, and many of the families in Ohio who can't afford to send their children to college probably cast their ballots for GWB in 2004 to keep the nation safe from gay people. :sarcasm:

[MBS]

7. excellent that Sen. Kerry is on this . Thanks, JK! n/t