Federal Reserve to Back Student Loans

To help alleviate the current credit crunch, the Federal Reserve announced last week that it intends to help secure student loans:

Although the plan, known as the Term Asset-Backed Securities Loan Facility, had original intentions of helping people meet the household and small business credit needs, it will also play a hand in assuring private loans for students.

"With the economic hardships some student may face [it gives them ] all the more reason for them to use the Federal Direct Loans before ever venturing into the private non-federal education loan arena," said James Mooney, associate director for the Office of Student Financial Aid.

According to the TALF document, the reserve will lend $200 billion to "financial institutions that hold securities backed by student loans, auto loans and credit-card debt." The U.S. Treasury Department will give $20 billion in credit protection to the FRBNY.

Read the article at redandblack.com.