Federal Reserve Answers Student Loan Liquidity Question

Free College Blog ^ | 5-05-2008 | John

[underground]

Forget this last post, the Federal Reserve has stepped in and settled the debate that was brewing between the White House & Congress. Basically, the student loan companies need someone to buy some loans so they can have enough reserve cash to offer more loans in the future. Due to high default rates, high inflation rates, and overall low student loan return rates, no investors are showing up for the normal bond auctions.

Part of this, of course, is due to an over-correction by Congress during the financial boom period of 2004 to 2006. By the time legislation had passed to reduce student loan subsidies, the boom had gone bust in a bad way and now the industry threatens to lock up in a credit freeze.

[underground]

No loan is too risky for the Federal Reserve! BTW, how many central banks have gone bankrupt in American history? Two already!

[rabscuttle385]

Let's all cheer and clap for our stupid Congress critters who thought they knew best, except now we must all pay for their idiocy through higher prices for housing, energy, food, and education. And yet the official government figures lowball inflation.

It's like one sick joke after another, except people keep re-electing the bums into office, as if they do not know any better.