Washington, DC – Senator John Kerry has introduced legislation -- the Emergency Student Loan Liquidity Market Act -- to help students who may have otherwise been denied loans despite having perfectly good credit, get approved for student loans.

In the early 1990s, Massachusetts students faced a similar problem. Thousands of students put deposits down for the following year only to be forced to back out of college because they couldn’t find the money to go to school. There are currently close to half a million college students in Massachusetts. Kerry’s legislation will make sure that more students across the state will have access to student loans and providers.

“Today’s student loan practices, coupled with skyrocketing tuition costs, are a barrier for more and more students trying to afford college. A college education means more than ever in today’s economy, but today we’ve got students with good credit being denied the loans they need to pay tuition. My legislation will help ease that burden and put a college education within reach,” said Senator Kerry.

"Senator Kerry's timely proposal to expand and enhance the liquidity in the student loan market is a creative and much needed solution. This will help tens of thousands of Massachusetts students and their families who are currently being unfairly squeezed by the credit crunch," said Richard Doherty, President of the Association of Independent Colleges and Universities in Massachusetts.

Recent reports have found that 45 student loan originators have decided to exit or suspend their participation in all or part of the Federal Family Education Loan Program (FFELP) since last summer. Because many student loan originators are depository institutions, liquidity vehicles are unavailable.

To fix this problem, Kerry’s legislation contains three emergency authorizations. First, the bill allows Federal Home Loan banks to invest in student loan-related securities with their surplus funds. Second, the bill allows Federal Home Loan Banks to accept student loans and student-loan related securities as collateral. Finally, the legislation permits the Federal Home Loan Banks to provide secured advances to its member to originate student loans or finance student loan-related securities.

A companion bill has also been introduced in the House by Congressman Paul Kanjorski (D-PA).

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