Senate Banking Panel Chair Pledges Action on Student Loan Access

Following a hearing on “Turmoil in U.S. Credit Market’s Impact on the Cost and Availability of Student Loans,” the chairman of the U.S. Senate banking committee urged action to ensure an uninterrupted supply of student loan dollars. Sen. Christopher Dodd, D-Conn., said he would urge the Treasury Department and Federal Reserve to take action to ensure capital is available to fund new student loans.

“While I am unaware of an instance to date when a student has been unable to secure a loan, the withdrawal of these lenders, the ongoing turmoil in U.S. credit markets and the illiquidity in the student loan market have fueled concerns that a potential student loan credit crunch may be looming,” Dodd said.

Jack Remondi, Sallie Mae’s vice chairman and chief financial officer, told the panel that without federal intervention “we are facing a scenario where demand for student loans will significantly outstrip the supply.”

Witnesses urged federal agencies to take quick action through steps such as authorizing the Department of Treasury’s Federal Financing Bank to “help prime the pump of liquidity” in the loan program.