Sen. Elizabeth Warren isn't letting up on Sallie Mae and how theNewark, Del.-based student lender may be benefitting from an inexpensive Federal Home Loan Bank creditline. The Massachusetts Democrat and consumer protection championsent Sallie Mae President/CEO Jack Remondi a letter Friday that compared the lender's use ofthe funds to how big banks benefitted from TARP funds.

When Warren served as chair of the Congressional Oversight Panelfor TARP, she said she learned that government cash infusions intoprivate companies, along with direct and indirect subsidies, canraise complex questions about which activities are being supported. Additionally, she saidshe learned to question whether companies receiving assistance arebeing entirely forthright in its description of the impact of suchsupport.

“While I understand one of the key goals of the FHLBs is tofinance economic growth, it is troubling to me that, based uponyour representations, Sallie Mae's use of the credit line does notappear to lead to the origination of any new loans or assisttroubled student borrowers,” Warren said. “If that is thecase, then I am having difficulty understanding how the line ofcredit to Sallie Mae meets the FHLB's stated goals.”

Warren also said she's concerned that Sallie Mae, which wasoriginally chartered as a government-sponsored entity but is now aprivate company, continues to receive indirect and directgovernment-supported subsidies, including some that extend wellbeyond the FHLB credit line.

“At the same time, students continue to pay high interest rateson their loans,” she said.

Warren has been a supporter of low-rate student loans,introducing a short-term plan earlier this year that would havedropped rates on federally guaranteed loans for needy students.Democratic attempts to extend temporarily low student loan rates failed in Congress, and rates will doublefrom 3.4% to 6.8% on July 1 for federally guaranteed studentloans.

Warren criticized Sallie Mae for profiting from sellingfederally guaranteed student loans to the government and borrowingbillions from a Department of Education created asset-backedcommercial paper facility at a rate of 0.82%.

“Sallie Mae's corporate filings state that it may choose torefinance that amount to an astonishing low 0.34% using the FHLBcredit line,” she said. “This piling on of government-supportedbenefits is in addition to the big fees Sallie Mae generates as aservicer and debt collector on federal student loans.”

The senator said she finds the practice disturbing because whileSallie Mae profits from government programs, borrowers are payinginterest rates “far in excess of the low cost of funds supported bythe U.S. taxpayers.”

A Sallie Mae spokesperson did not immediately respond to arequest for comment.