A spokesperson for Sallie Mae told The Hill the credit was used to support a lingering amount of federally guaranteed student loans still on its portfolio, after the lender stopped issuing such loans in 2010. She added that the line of credit has "no bearing" on Sallie Mae's private student loan activities.
"FHLB is used to fund legacy federally guaranteed loans through a subsidiary of the corporation, not the Sallie Mae Bank. You may be aware that we stopped originating federally guaranteed loans in 2010. The FHLB facility has no bearing on our private education loans or the Sallie Mae Bank cost of funds," the spokesperson said.
But in a new letter sent Tuesday, Warren argues that any claim that the line of credit is specifically devoted to a dwindling amount of obsolete, government-backed loans is contradicted by Sallie Mae's own corporate filings.
Warren pointed to corporate filings that stated the lender planned to fund its ongoing operations, including the creation of new private student loans, through cash, investments, the repayment of existing loans, as well as drawing down on its arrangement with the Federal Home Loan Bank in Des Moines.
So far, Sallie Mae has tapped the line for $2.1 billion, and it is secured by $2.7 billion in loans.
"How is it that the Federal Home Bank credit has 'no bearing' on your private student loans when your company's 10-K disclosure acknowledges that the line of credit could be used to help fund the origination of private student loans?" she said.
She asked the lender to clarify its stance on whether the credit from the Federal Home Loan Bank would be used to create new private student loans.