Here is the text of the email that went out today, asking schools to ensure that they are "Direct Loan-ready for the 2010-11 academic year.
THE SECRETARY OF EDUCATION
WASHINGTON, DC 20202
October 26, 2009
As
this academic year moves forward, it is hard to believe we already need
to consider the 2010-2011 year to come. In doing so, I am writing to
seek your assistance and offer mine in taking the necessary steps to
ensure uninterrupted access to federal student loans by ensuring your
institution is Direct Loan-ready for the 2010-2011 academic year.
Eighteen
months ago, uncertainty in the financial markets seriously threatened
the availability of Federal Family Education Loan (FFEL) Program loans
for the upcoming 2008-09 academic year. Congress acted quickly to
provide the Department of Education with unprecedented temporary
authority to directly finance loans made through FFEL Program lenders.
The goal was to ensure that every student or parent with a need for a
federal loan would be able to get one, whether or not the student’s
educational institution had taken the steps to provide loans through
the Direct Loan Program (where loan access was not affected). This
stopgap measure, the Ensuring Continued Access to Student Loans Act
(ECASLA), was helpful in assisting FFEL Program lenders in making $61.3
billion in new loans to students and their parents this past year. And
the bulk of those funds—some $46.3 billion—was provided by the
Department of Education.
While
many institutions like yours continued to use the FFEL Program loan
delivery process last year, more than 500 others responded to the
uncertainty by switching to the Direct Loan Program. These colleges’
move to direct lending happened in an efficient and effective manner,
without any interruption of service to students, and the number of
Direct Loans increased by nearly two-thirds compared to the previous
year. As you know, the Direct Loan Program provides students with the
same types of loans, with essentially the same terms, as those made in
the FFEL Program.
I
do not anticipate any major loan access problems during the remainder
of this academic year because Congress’s temporary measure remains in
effect. However, while there are encouraging signs that the financial
markets are rebounding, the most prudent course of action is for you to
ensure that your institution is Direct Loan-ready for the 2010-2011
academic year. That way, loan access for your students will be
assured. As you may know, President Obama has proposed that Congress
make the loan system more reliable by moving to a 100 percent Direct
Loan delivery system. In any event, under current law, ECASLA will
expire, and the continued participation of FFEL Program lenders will be
in question.
The
Department of Education stands ready to assist with any questions you
and your staff may have about becoming Direct Loan-ready. Many
institutions have already taken the initial step of contacting us to
ensure the appropriate transition steps have been taken at Federal
Student Aid to begin the process. If your school has not taken this
initial step, we recommend that you do so. Please also reach out to
your technology, financial aid, and business offices to make sure they
are working together to ensure federal loan access for your students
and their parents. If they are unsure of the steps to take, please
have them contact our school relations center at 1-800-848-0978, or
e-mail us at DLEnrollment_FSA@ed.gov with questions.
Thank you for your attention to this important matter.
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Related posts:
- The Chain Letters Come Full Circle (November 18)
Related articles:
- New York Times: Colleges Are Pushed To Convert Loan System
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