ED Implements Expanded ECASLA Programs (Short-term Purchase Program)

January 14, 2009

ED Implements Expanded ECASLA Programs (Short-term Purchase Program)

The Department of Education (ED) announced details of a short-term purchase program designed to complement existing Ensuring Continued Access to Student Loans Act (ECASLA) liquidity options. The short-term purchase program allows ED to purchase up to $500 million of 2007-2008 academic year Federal Family Education Loan Program (FFELP) loans each week, not to exceed a total of $6.5 billion in purchases.

The program lasts from December 1, 2008 until February 28, 2009 or the date of the commencement of the Asset-Backed Commercial Paper conduit. Loan holders wishing to submit loans for purchase are required to complete a Master Loan Sale Agreement, which is included in the December 2, 2008 Federal Register.

Loans eligible for purchase include fully-disbursed subsidized and unsubsidized Stafford loans and PLUS loans originated for the 2007-2008 academic year. ED will purchase these loans at 97 percent of the total of the outstanding principal balance plus accrued but unpaid interest as of the purchase date. Purchased loans will be serviced by ED and will no longer retain the guarantee. Some borrower benefits can be associated with purchased loans. These acceptable benefits are included in "Exhibit F" of the Master Loan Sale Agreement included in the Federal Register notice.

A loan is not eligible for purchase if:

It is more than 210 days delinquent at the time of sale.
It is in default status.
It is part of a default claim with a guarantor.
It has an associated encumbrance, lien, security interest, or other prior commitment.
The borrower was provided a cash rebate.
It included a cash rebate for the borrower.

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..