First, most new loans are made by the federal government. A lot of people that graduated with their last degree a while back remember the FFEL system+ and think

First, most new loans are made by the federal government. A lot of people that graduated with their last degree a while back remember the FFEL system+ and think that's how it still works, but it doesn't anymore. There's some private loans, but it is a small part of new origination and has been for years. So if any entity would be "getting theirs now" would mostly be the federal government. Second, loans are principle and interest. Some people are still paying off loans made by the federal government with an interest rate of 8.5% (PLUS graduate loans from 7/1/06–6/30/10). Other loan programs or origination times are lower, but still fairly high. There's a private market to refinance these high interest rate loans at a lower rate, but it still pretty small and selective. If the Fed were to buy repackaged refinanced loans it would tend to increase demand and capacity by companies to refinance loans and thus decrease the average interest rate paid and the number of loans refinanced. The same thing has happened (and is still happening) in residential real estate. The Fed isn't forgiving anyone's mortgage or writing any new mortgages, but by buying up enormous amounts of repackaged mortgage debt it is driving private companies to seek out mortgage debt to repackage and thus lowering mortgage rates. That was the entire point of the exercise. +Under FFEL loans were made by private companies but guaranteed by the federal government. Many of those loans could be refinanced without losing the government guarantee.