December 4, 2008

Department of Education Announces New Measures to Ensure FFELP
Loan Access

As first reported in OGSLP’s November 14 Legislative Update, Secretary of Education Margaret Spellings issued a Dear Colleague Letter outlining the U.S. Department of Education’s (ED) additional plans to ensure continued access to federal student loans for the 2009-10 academic year, as authorized by the extension of the Ensuring Continued Access to Student Loans Act (ECASLA).

According to the letter, ED will replicate the successful loan purchase and participation programs currently in place. ED also intends to provide liquidity support to one or more conforming Asset-Backed Commercial Paper (ABCP) conduits to purchase and provide longer-term financing for FFELP loans. Non-consolidation FFELP loans fully disbursed between Oct. 1, 2003 and July 1, 2009 will be eligible for inclusion.

In addition, ED will enter into forward purchase commitments with eligible lender trustees who will manage the conduits. The eligible lender trustees will issue and sell commercial paper that is backed by loans in the pool and pay the lenders from the amounts received from investors.

OGSLP will continue to keep you informed about legislative activity. We encourage you to visit our Legislation Page often to view important updates and access more detailed information. If you have questions about ED’s loan liquidity programs, contact Rick Edington, Director for School/Lender Services, Default Prevention and Outreach at 405.234.4333 or redington@ogslp.org.