The Department of Education (ED) announced it will purchase Stafford/PLUS FFELP loans for the 2007-2008 academic year at a purchase price of 97% of principal and unpaid interest. 

Eligible lenders can sell 2007-2008 loans until the earlier of the operational date of the ABCP program under Ensuring Continued Access to Student Loans Act (ECASLA) and Feb, 28, 2009.

Thereafter, lenders will be able to fund these and other loans with the ABCP conduits established under ECASLA. 

ED expects the ABCP program will be operational before the February 28, 2009.  ED will purchase a maximum of $500 million in loans per week, up to an aggregate of $6.5 billion during the designated time-period. 

If the loans offered for sale by lenders exceed $500 million, the Department of Education will determine the amount that each lender will be eligible to receive from the weekly total, not to exceed the amount offered for sale by that particular lender.  Details of the allocation mechanism have not announced at this time.  The process is intended to ensure a fair and equitable distribution of purchases based on actual FFELP activity by each lender, according to ED.

Analysts from Merrill Lynch  believe the programs under ECASLA have indirectly benefited the educational loan ABS market by providing key issuers in the market with liquidity.  "We believe lenders and students could further benefit from the expansion of purchase/financing program under ECASLA to include, at a minimum, FFELP Consolidation loans and FFELP student loan ABS," analysts said. " These efforts could help to improve liquidity in the student loan ABS market."

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