Ensuring Continued Access to Student Loans Act of 2008
The “Ensuring Continued Access to Student Loans Act of 2008” (ECASLA) created programs to ensure that federal loan funds remained available to eligible borrowers by increasing liquidity in the student loan marketplace.
Below is a useful side-by-side comparison chart as well as a brief description of each of the programs along with ASA’s processing details if applicable. If you have specific questions, please contact your client manager or ASA’s Call Center at 800.999.9080 and select Option 1.
For more detailed information, please visit the Department of Education’s ECASLA Website.
| Program | Loan Purchase Commitment Program (PUT) | Loan Purchase Commitment Program (PUT) Extension | Loan Participation Purchase Program | Conduit |
|---|---|---|---|---|
| Objective |
Commitment by ED to purchase eligible 2008-2009 FFEL loans through 9/30/2009 2007/2008 loans recently added as stop-gap to conduit Provide liquidity after fully disbursed |
Commitment by ED to purchase eligible 2009 – 2010 FFEL loans through 9/30/20010 Provide liquidity after fully disbursed |
Commitment by ED to purchase “participation interests” in eligible 2008 – 2009 FFEL loans through September 30, 2009 Provide liquidity as disbursements are made |
Department of Education promises to purchase the loans if the commercial paper that has been issued by the conduit cannot be reissued and the conduit doesn’t have sufficient cash to repay the investors Provide security for commercial paper backed by loans |
| Terms |
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Loans can either be redeemed by lender by paying off ED or can be sold (PUT) to ED outright |
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| Purchase Price |
Current Outstanding Principal Balance Accrued interest owed by borrower Reimbursement of 1% lender fee $75 per loan |
Current Outstanding Principal Balance Accrued interest owed by borrower Reimbursement of 1% lender fee $75 per loan |
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Purchase Price: “…the Department will agree to purchase loans at either 97% or 100% of the total of the outstanding principal balance plus accrued but unpaid interest as of the purchase date, depending on the characteristics of the loan.” “…Secretary of Education determined that 100% of outstanding principal and accrued interest was the appropriate price for those loans first disbursed on or after May 1, 2008, with no borrower benefits or only ‘eligible borrower benefits,’ and not more than 255 days delinquent at the time of purchase…” …97% of principal and interest for any other loans. |
| Loan Dates |
Made for loan periods that include, or begin on or after July 1, 2008 First disbursed on or after May 1, 2008 but no later than July 1, 2009 Fully disbursed by 9/30/2009 Recently added as stop-gap until conduit up and running: Loan period includes or begins on or after July 1, 2007 First disbursement on or after May 1, 2007 and no later than July 1, 2008 |
Made for loan periods that include, or begin on or after July 1, 2009 First disbursed on or after May 1, 2009 but no later than July 1, 2010 Fully disbursed by 9/30/2010 |
Made for loan periods that include, or begin on or after July 1, 2008 First disbursed on or after May 1, 2008 but no later than July 1, 2009 Fully disbursed by 9/30/2009 |
Loans made between October 1, 2003 and July 1, 2009 First disbursement on or after October 1, 2003 and no later than July 1, 2009 Fully disbursed by September 30, 2009 Conveyed to conduit by June 30, 2010 Loans may be PUT to Department by conduit through September 30, 2014 |
| End Date | 9/30/2009 (really 45 days prior) |
9/30/2009 (really 45 days prior) |
9/30/2009 |
9/30/2014 |
| Still an ASA Loan? | Until sold |
Until sold |
Yes – but if PUT moves at time of sale |
Yes – while in conduit; changes if ED buys conduit loans |
| Loan Types |
Subsidized and unsubsidized and unsubsidized Stafford loans, Graduate and Parent PLUS; Consolidations loans excluded LLR loans excluded Defaulted loans or claim filed loans excluded Loans 210 or more days delinquent excluded Loans with borrower benefits other than upfront fee payments or .25% interest rate reductions excluded |
Subsidized and unsubsidized and unsubsidized Stafford loans, Graduate and Parent PLUS; Consolidations loans excluded LLR loans excluded Defaulted loans or claim filed loans excluded Loans 210 or more days delinquent excluded Loans with borrower benefits other than upfront fee payments or .25% interest rate reductions excluded |
Subsidized and unsubsidized and unsubsidized Stafford loans, Graduate and Parent PLUS; Consolidations loans excluded LLR loans excluded Defaulted loans or claim filed loans excluded Loans with borrower benefits other than upfront fee payments or .25% interest rate reductions excluded |
Subsidized and unsubsidized and unsubsidized Stafford loans, Graduate and Parent PLUS; Details to be released |
| When | Loans must be fully disbursed to be purchased |
Loans must be fully disbursed to be purchased |
As each disbursement released |
Loans put in conduit as disbursed |
| Miscellaneous |
Must give ED 45 day advance notice before purchase No minimum number of loans or dollars |
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Borrower Benefits: While loans that have a direct payment to a borrower as a borrower benefit—rather than an interest or principal reduction—are eligible for inclusion in the Conduit, the Department will require the holder of the loan to make the payment to the borrower prior to sale to the Department, regardless of whether the borrower actually earned the benefit. Unfortunately, most repayment benefits offered to borrowers are in the form of interest or principal reduction. |
Short Term Loan Purchase
Designed as a short term solution until the Asset-Backed Commercial Paper Conduit (ABCP) (see below) became operational, the Department purchased fully disbursed loans from participating lenders through February 28, 2009, if all of the following applied at the time of the purchase:
- – Loan period included or began on July 1, 2007; and
- – Loan was first disbursed after May 1, 2007; and,
- – Loan is not 210 days or more delinquent
Asset-Backed Commercial Paper Conduit (ABCP)
The Department will provide “buyer-of-last-resort” support to one or more ABCP Conduits that will purchase Federal Family Education Loan Program (FFELP) loans made between 2003 – 2009 (with first disbursements on or after October 1, 2003 but no later than June 30, 2009). Eligible loans must have been fully disbursed by no later than September 30, 2009. Liquidity for new FFELP loans is created when lenders sell loans to the conduit. The loans may be repurchased by the lender or sold to the Department of Education.
Loans in a conduit maintain their ASA guaranty.
Information specific to Asset-Backed Commercial Paper Conduit may be obtained at the Department of Education’s Website.
Loan Purchase Commitment Program (“put”)
The Department will purchase fully disbursed 2008/2009 and 2009/2010 loans from participating lenders through September 30, 2009, and September 30, 2010, respectively. Although still a part of FFELP, loans that are “put” to the Department are no longer ASA loans.
Lenders identify loans that they would like to sell or “put“ to the Department within 45 days of the desired sale date and will notify ASA. Prior to the desired sale, there is a 9-business-day window where no changes to these loans can be made other than cancellations. If the Department determines that the loans are eligible for sale, the rights are then sold to the Department for the total amount of what was disbursed on the loan.
The Department of Education’s loan servicer then provides files to ASA containing details about loans that have been sold to the Department. ASA contacts the schools individually if any of their students’ loans have been affected.
- – Loan Adjustments
All adjustments after the put date must be made through the Department’s Student Loan Servicing Center at 866.938.4750. - – ASA Direct®
If you typically use ASA Direct® to process loan adjustments on ASA loans, you will receive an error message when attempting to adjust a loan that has been sold to the Department of Education. You may also receive an error message when attempting to adjust a loan that is pending sale for which the adjustment cutoff date has passed.
Loan Participation Purchase Program (“participation”)
Loans from 2008/2009 and 2009/2010 first disbursed through September 30, 2009, and September 30, 2010 respectively may be placed in a participation facility. Unlike Loan Commitment, loans do not have to be fully disbursed in order to be participated; however, future disbursements are made by the originating lender and will not be reported as participated until the loan is fully disbursed. A new lender code is utilized for the participated loan amounts. Lenders may repurchase the participated loan or may “put” the loan to the Department. These loans maintain the ASA guaranty unless and until they are “put” to the Department.
