The Education Department announced Thursday that it would buy up to $6.5 billion of federally guaranteed student loans made in the 2007-8 academic year as part of its effort to make sure loans are available.
Congress has allowed the department to buy federal loans made from 2003 to 2009, but the department has not yet used the full range of its authority. The program announced Thursday will run from December to late February.
“We have full confidence that the programs we’ve announced will work in bringing liquidity to the marketplace,” Sara Martinez Tucker, under secretary of education, said on a conference call. Eligible loans are federal Stafford loans and parent PLUS loans, she said, but not consolidation loans, which students use to combine multiple loans and make a single monthly payment. The department will pay 97 percent of the principal and outstanding interest due for loans.
Concern about availability of student loans has grown as the credit crisis has made borrowing more difficult for families. Federal loans this year have so far been available and the Education Department has not had to use its “lender of last resort” program, Ms. Tucker said.
