Plans to Ensure Access to Federal Loans Set
July 7, 2008
The Department of Education has worked with the Department of Treasury and the Office of Management and Budget to design a public/private partnership to ensure that federal loans continue to be available to students despite the credit crunch.
In a June 18 Dear Colleague letter, ED detailed the steps it has taken to implement the Ensuring Continued Access to Student Loan Act of 2008. One of the major steps has been to set up two programs that provide for the purchase of Federal Family Education Loans (FFEL) from private lenders by ED. These programs are intended as a way to provide lenders with necessary capital to allow them to continue to make new FFEL loans to students. Only loans made for the 2008-09 award year will be eligible, and lender would have to commit to continue lending activities under the FFEL program.
- Under the Loan Purchase Commitment Program, ED will commit to purchasing eligible loans at a price equal to the sum of (1) the loan’s outstanding principal balance, (2) accrued interest, (3) the 1 percent loan origination fee paid to ED, and (4) $75. The $75 dollars is estimated to cover the lender’s origination, servicing, and deconversion costs.
- Under the Loan Participation Purchase Program, ED will purchase participation interests in eligible loans. It will hold them no later than September 30, 2009. The lender may redeem the participation interest at a price that provides ED a yield equal to the commercial paper rate plus 50 basis points.
Both programs are structured to be cost-neutral to the federal government. A July 1 Federal Register notice provided details of the programs including the calculations used to arrive at the pricing scheme.
NACUBO Contact: Anne C. Gross, vice president, regulatory affairs, 202.861.2544.
- NACUBO Statement on Endowment Inquiry
- NACUBO Urges One-Year Postponement of Changes to 1098-T Reporting Requirements
- GASB Addresses Asset Retirement Obligations and Seeks Field Testers
- 2016 Higher Education Accounting Forum
April 10-12, 2016
- 2016 CAO and CBO Collaborations
August 1-2, 2016
- 2016 Planning and Budgeting Forum
September 19-20, 2016
- WEBCAST: Legislative Lunchcast: A 30-Minute Washington Update from NACUBO
Monday, February 22, 2016 12:00pm ET
- WEBCAST: Responsibility Center Management: Two Different Perspectives
Thursday, March 17, 2016 1:00PM ET
- WEBCAST: Title IX: Key Issues Surrounding Institutional Compliance
Wednesday, April 20, 2016 1:00PM ET
- WEBCAST: The Clery Act: Strategic Planning to Mitigate Institutional Risk
Thursday, May 26, 2016 1:00PM ET
- ON-DEMAND: NACUBO Live! Results of the 2015 NACUBO-Commonfund Study of Endowments
- A Guide to College and University Budgeting: Foundations for Institutional Effectiveness, 4th ed. - by Larry Goldstein
- NACUBO's Guide to Unitizing Investment Pools - by Mary S. Wheeler
- Managing and Collecting Student Accounts and Loans - by David R. Glezerman and Dennis DeSantis