“U.S. Department of Education Announces Actions to Ensure Students Continued Access to Federal Student Loans”

On November 8, 2008, the U.S. Department of Education announced two new steps that are being taken to ensure that students and their families continue to have access to Federal student loans:

·        The Department is extending its loan purchase and loan participation programs for an additional year; and
·        The Bush Administration intends to provide liquidity support to one or more conforming Asset-Backed Commercial Paper (“ABCP”) programs to purchase and provide longer term financing for student loans.

Under the current loan purchase and loan participation programs, lenders in the Federal Family Education Loan Program (the “FFELP”) can sell to the Department loans, or participation interests in loans, having their first disbursement between May 1, 2008 and July 1, 2009.  These programs were announced by the Department in May 2008, under authority provided by the Ensuring Continued Access to Student Loan Act, which was signed by the President in October 2007.  The Department is extending these programs for FFELP loans that will be disbursed during the 2009-10 academic year.

This Stroock Special Bulletin discusses these actions and how they will help students and their families obtain FFELP loans to help finance the costs of education.