June 25, 2013

Sen. Warren Asks Sallie Mae to Clarify Statements on Federal Home Loan Bank Financing

WASHINGTON, DC –United States Senator Elizabeth Warren today sent a letter to Sallie Mae, asking the company to clarify statements it has made regarding the use of credit from the Federal Home Loan Bank to support its private student loan business.  Senator Warren’s letter was sent in advance of today’s Senate Banking Committee Hearing on regulation of the private student loan industry.

In a letter sent yesterday to Federal Housing Finance Agency (FHFA) Acting Director Ed DeMarco, Senator Warren requested information about the role of the Federal Home Loan Banks in providing financing to institutions that offer high-interest private loans to students like Sallie Mae. She expressed concern that financing originally intended to support lenders offering families home mortgages is being offered to the largest provider of private education loans.

Sallie Mae representatives then issued a statement claiming its federal line of credit has “no bearing on our private education loans.” This appears to directly contradict language from the publicly-traded company’s recent corporate filings.