Great article from HuffingtonPost.com re student loan lender Navient Corp./Sallie Mae can be found here.
Over the last couple of years Sen. Elizabeth Warren (pioneer for bankruptcy!) has continually voiced criticism of Navient Corp./Sallie Mae for taking advantage of taxpayer-subsidized funds to reduce its costs without passing along those savings to student loan borrowers.
I have pulled some juicy tidbits from the article here:
-[I]n the first six months of 2013, Sallie Mae enjoyed a 0.28 percent interest rate when borrowing from [a lender] making it the student lender’s lowest-cost source of funds outside of debt tied to derivatives. From 2010 to 2012, the [lender] lent Sallie Mae money at rates that on average were no higher than 0.35 percent.
-In effect, Sallie Mae and Navient have been able to borrow billions of dollars at what Warren said were “astonishingly low rates” from a taxpayer-backed lender for next to nothing, purely to fuel the student loan giant’s growth.
-As it borrowed, Sallie Mae was also making loans to students at interest rates up to 40 times the rate the company paid to borrow from the Federal Home Loan Bank of Des Moines.
-In April 2013, researchers at the Federal Reserve Bank of New York published anexplosive report: For the first time in at least a decade, data showed that young Americans with student debt were less likely than their unburdened peers to have home mortgages.
-Sallie Mae and Navient’s arrangement with the Federal Home Loan Bank system not only amounted to a “backdoor way to subsidize highly profitable private student lenders,” as Warren put it, but it also may have had the perverse effect of actually limiting homeownership.
Makes me wonder if all of us BK lawyers will be spending the next xyz years primarily helping debtors with their student loans instead of foreclosure sales!