Warren questions housing bank's line of credit for student loan lender

The 12 Federal Home Loan Banks were established during the Great Depression, and given the primary mission of providing affordable funding to financial institutions, which in turn could be used to provide affordable mortgages. Warren did not identify which Federal Home Loan Bank had extended the credit, but Sallie Mae corporate documents indicate the arrangement was struck with the Federal Home Loan Bank of Des Moines.

A spokesperson for Sallie Mae said the lender, through a subsidiary, relied on the bank's credit to fund federally guaranteed loans that remain part of its portfolio. Sallie Mae stopped issuing the government-backed loans in 2010, and its use of Federal Home Loan Bank credit has "no bearing on our private education loans."

So far, Sallie Mae has tapped the line for $2.1 billion, and it is secured by $2.7 billion in loans.

Warren argued that if one of those banks offered credit to Sallie Mae, they may actually be undermining their own overarching mission. She cited reports from the Consumer Financial Protection Bureau — an agency she helped craft — that found that high levels of student loan debt may be a "significant barrier" to people trying to buy their first home.

The levels of student loan debt have grown along with the cost of a college education, to the point that it now is the highest form of consumer debt, topping $1 trillion.

Warren's letter comes as Congress is focusing in on student loans with a deadline looming. Absent congressional action, interest rates for new Stafford subsidized student loans will double from 3.4 percent to 6.8. Both parties have put forward plans to address the spike, and President Obama put forward his own proposal to tie the rates on the loans to other interest rates. Warren has put forward her own bill, which would for one year give students the same low rate that banks can borrow from the Federal Reserve.

—This post was updated at 12:30 pm.