**LOAN PURCHASE PROGRAMS ELECTRONIC ANNOUNCEMENT** \#**38**

Date: December 3, 2008

To: FFEL Program Community

From: James Manning, Acting Chief Operating Officer

Federal Student Aid

Subject: Submission of "Offer to Sell" Requests Under the 2007-2008
Short-Term Purchase Program

In Electronic Announcement #36 we attached the text of the Notice and
the Master Loan Sale Agreement 2007-2008 (2007-2008 MLSA) that was
published in the *Federal Register* on December 2, 2008 announcing the
terms and conditions of the Department's 2007-2008 Short-Term Purchase
Program. Electronic Announcement #37 provided instructions for the
submission of 2007-2008 MLSA execution documents. This announcement
provides format and submission instructions for the "Offer to Sell" that
must be submitted by a loan holder wishing to sell 2007-2008 academic
year loans to the Department.

Note that, unlike the process required for the sale to the Department of
2008-2009 academic year loans, a "Notice of Intent to Participate is not
required for the 2007-2008 Short-Term Purchase Program.

Thank you for your continued support of these FFEL Loan Purchase
Programs.

Attachment

**United States Department of Education**

**Federal Family Education Loan Program**

**2007-2008 Short-Term Purchase Program**

**["Offer to Sell" 2007-2008 Academic Year FFEL Loans]{.smallcaps}**

**[December 3, 2008]{.smallcaps}**

This document provides the format and instructions for a lender/holder's
(now called the "Seller") submission of an "Offer to Sell" 2007-2008
FFEL Program loans to the U.S. Department of Education (the Department).
Note that a Seller may not submit an "Offer to Sell" earlier than the
day it submitted its Adoption Agreement for the Master Loan Sale
Agreement 2007-2008 (2007-2008 MLSA) to the Department, as provided in
Electronic Announcement \# 37. As noted in earlier documents, the
Department will only purchase loans under this program once each week
with the Purchase Date generally being Monday (see below for holiday
exceptions). The lender/holder's "Offer to Sell" is due no later than
noon on the Wednesday second preceding the Purchase Date.

This document also describes the steps that the Seller must complete for
any weekly sale of 2007-2008 academic year FFEL Program loans and the
deadlines for completing those steps. In a separate Electronic
Announcement we will provide the specifications and submission
requirements for the required Bill of Sale and the data files that must
be submitted to the Department's servicer.

**["Offer to Sell" 2007-2008 Eligible Loans]{.underline}**

As provided in Section 1 of the 2007-2008 MLSA, each Seller that wishes
to sell 2007-2008 academic year loans to the Department for a given week
must submit an "Offer to Sell" for that week. The Seller must submit its
"Offer to Sell," in the format provided in this document, as a PDF
attachment to an e-mail that is sent to <ffel.agreementprocess@ed.gov>,
with a subject line of "Offer to Sell for Purchase Date of \<insert
relevant Purchase Date\>." As stated in the 2007-2008 MLSA, the
Department will not purchase loans from a lender in a given week unless
the average outstanding principal balance of the loans offered by that
lender for that week is at least \$3,000. If the Department determines
that the average balance of loans in an offer is not at least \$3,000
the entire offer from that Seller will be rejected for that week.

For each week, the Department will consider those "Offers to Sell" that
it receives by the stated deadline date (the second Wednesday preceding
the Purchase Date) and will calculate how much of each Seller's offer
the Department will purchase (see below for a discussion of that
calculation) and will notify each Seller by e-mail addressed to the
contact person identified on the Seller's "Offer to Sell" of the
accepted amount.

Offer to Sell 2007-2008 Academic Year Loans

Page 2

**[Calculation of Amount of Offer Accepted for Purchase]{.underline}**

The Department will purchase all Eligible Loans offered for sale by
Sellers for the week if the amount needed to purchase those loans does
not exceed \$500 million. If the amount needed to purchase all loans
included in timely, qualifying offers for a week exceeds \$500 million,
the Department will use the following process to calculate the portion
of the \$500 million that will be accepted from each Seller's offer --

1.  Determine the percentage of each Seller's total 2007-2008 FFEL
    Stafford and PLUS holdings (as of November 19, 2008) to the total
    2007-2008 FFEL Stafford and PLUS holdings for all loan holders.

2.  Calculate the ratio of each Seller's holding percentage from Step 1
    to the holding percentages of all Sellers submitting offers for the
    week.

3.  Apply the ratios calculated in Step 2 to the \$500 million available
    for the maximum week to determine each Seller's initial share.

4.  The amount accepted for each Seller will be the lesser of the amount
    calculated in Step 3 or the amount offered by the Seller in its
    "Offer to Sell".

5.  In the event that the amount determined in Step 4 for one or more
    Sellers is the offered amount (as opposed to the higher calculated
    amount from Step 3) the residual amount still available from the
    \$500 million will be allocated by calculating the percentage of
    each Seller's shortfall amount (amount offered by the Seller less
    amount calculated under Step 4) to the sum of all Seller's shortfall
    amounts and applying that percentage to the residual funds
    available. This additional amount will be added to the amount
    calculated in Step 4 unless the total is greater than the Seller's
    offered amount, in which case the Seller's offered amount will be
    used. In the event that funds still remain this step will be
    repeated for any Seller whose total does not yet equal their offered
    amount.

6.  Note that no one Seller will be approved for more than \$425 million
    (85% of the \$500 million) in a week unless all other Sellers'
    requested offers have been met.

As noted earlier, once the Department has calculated the amount of a
Seller's offer the Department will inform each Seller of the accepted
amount in an e-mail addressed to the contact person included on the
Seller's "Offer to Sell."

**[Steps in Loan Purchase Process]{.underline}**

Once the Department has informed the Seller of the amount of the
Seller's offer the Department will accept for purchase, the Seller and
the Department's servicer will coordinate submission of the loan
conversion files (see upcoming, Electronic Announcement #39), consistent
with the schedule and process discussed below, so as to consummate the
sale on the scheduled Purchase Date. The Seller' servicer must cooperate
with the Department's servicer to resolve any data file exceptions,
including loan eligibility issues. The final sale must have a total
value (97 percent of the outstanding principal plus outstanding accrued
borrower interest as of the Purchase Date) equal to or only slightly
less (in the event that one or more loans have lost their eligibility to
be sold) than the amount accepted by the Department.

Offer to Sell 2007-2008 Academic Year Loans

Page 3

The Department's servicer will prepare and forward to the Seller's
servicer for validation a pre-sale conversion file with totals. The
Seller's servicer must review this file and confirm the pre-sale totals.
The Seller must use these totals and related reports to complete the
required Bill of Sale and the associated Final Loan Schedule Summary of
Loans Sold (see Exhibit B of the 2007-2008 MLSA).

For illustrative purposes only, the chart below presents a sample
timeline with deadlines, for an offer that will result in a Purchase
Date of Monday, December 22. All weekly sales begin with the submission
by Sellers of "Offers to Sell" no later than noon on the second
Wednesday preceding the Purchase Date - December 10 in this example.
Note that the same day of week activities apply to each activity even
when the Purchase Date is moved from a Monday to a later day because of
a Federal holiday (see below for list of those exceptions). All times
below are Eastern Time.

  --------------------------------- ------------------- -------------------------
  **2007-2008 FFEL Short-Term                           
  Purchase Program**                                    

  **Step/Activity**                 **Performed By**    **Completed No Later
                                                        Than**

                                                        

  Step One -- "Offer to Sell" is    Seller or Seller's  Noon, Wednesday, December
  submitted to Department's FSA     servicer            10
  Office by e-mail to:                                  
  <ffel.agreementprocess@ed.gov>.                       

  Step Two -- Determination of      Department's        Noon, Thursday, December
  amount of Seller's offer that     Federal Student Aid 11
  will be accepted.                 Office              

  Step Three -- Seller informed by  Department's        Noon, Thursday, December
  e-mail of accepted amount of      Federal Student Aid 11
  offer the Department will         Office              
  purchase.                                             

  Step Four -- Submission to the    Seller or Seller's  Noon, Monday, December 15
  Department's servicer of          servicer.           
  conversion file for accepted                          
  amount.                                               

  Step Five -- Editing of           Department's        Noon, Wednesday, December
  conversion file and submission of servicer            17
  Loan Listing to Seller or                             
  Seller's servicer.                                    

  Step Six -- Submission of Bill of Seller of Seller's  7:00 AM, Thursday,
  Sale, with supporting Schedule to servicer            December 18
  Department\' servicer by e-mail                       
  to: <ED.servicer@ed.gov>.                             

  Step Seven -- Creation of         Department's        5:00 PM, Thursday,
  internal payment invoice.         Federal Student Aid December 18
                                    Office              

  Step Eight -- Auditing of payment Department's        Noon, Friday, December 19
  invoice and submission of Funding Federal Student Aid 
  Request to the Department's       Office              
  Finance Office.                                       

  Step Nine -- Payment              Department's        10:00 AM, Monday,
  authorization sent to U.S.        Finance Office      December 22
  Treasury                                              

  Step Ten -- Payment made to       U.S. Treasury       5:00 PM, Monday, December
  Seller's account                                      22

  Step Eleven -- Loans converted to Department's        5:00 PM. Monday, December
  Department's servicer's system    servicer            22
  --------------------------------- ------------------- -------------------------

Offer to Sell 2007-2008 Academic Year Loans

Page 4

Exceptions: While Offers to Sell must still be submitted by the second
Wednesday preceding the Purchase Date (usually the second following
Monday), for the weeks that include the Federal holidays of December 25,
2008, January 1, 2009, January 19, 2009 and February 16, 2009 the
Purchase Dates will be as follow --

  ----------------------------------- -----------------------------------
  **Purchase Date Exceptions**        

  Offer to Sell Submission Date       Purchase Date

  Wednesday, December 17, 2008        Tuesday, December 30, 2008

  Wednesday, December 24, 2008        Wednesday, January 7, 2009

  Wednesday, January 7, 2009          Tuesday, January 20, 2009

  Wednesday, February 4, 2009         Tuesday, February 17, 2009
  ----------------------------------- -----------------------------------

As noted above, we will provide in Electronic Announcement #39
information on contact points with the Department's servicer, data file
specifications, and submission instructions.

"**OFFER TO SELL"**

**PURSUANT TO MASTER LOAN SALE AGREEMENT 2007-2008**

**To:** U.S. Department of Education \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
200\_\_\_

**From:** [**\_\_\_\_\_\<**Name of
Seller\>]{.underline}**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**Seller's Lender ID (LID):**
**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**Proposed Purchase Date:** \[MM/DD/CCYY\] (See page 4 of Electronic
Announcement #38 for allowable dates)

Certification: The Seller by submitting this "Offer to Sell" offers to
sell to the U.S. Department of Education Eligible Loans, as defined in
Section 3 of the Master Loan Sale Agreement 2007-2008, on the Purchase
Date proposed above at a total purchase price of \$\_[\<insert amount
from last computation below\>]{.underline}. The Seller also certifies
that it will sell such loans to the Department up to the dollar amount
of this offer that is accepted by the U.S. Department of Education.

**SUMMARY OF LOANS OFFERED FOR SALE**

+--------------+-------+-----------+-----------+---------+------------+
| **Column A** | **C   | **Column  | **Column  | *       | **Column   |
|              | olumn | C**       | D**       | *Column | F**        |
|              | B**   |           |           | E**     |            |
+--------------+-------+-----------+-----------+---------+------------+
| **Loan       | **N   | **Ou      | **Accrued | **Total | **Average  |
| Type**       | umber | tstanding | Borrower  | Value   | O          |
|              | of    | Pr        | Interest  | of      | utstanding |
|              | Lo    | incipal** | at        | Loans** | Principal  |
|              | ans** |           | Purchase  |         | Balance**  |
|              |       | **Balance | Date**    |         |            |
|              |       | at        |           |         |            |
|              |       | Purchase  |           |         |            |
|              |       | Date**    |           |         |            |
+--------------+-------+-----------+-----------+---------+------------+
| FFEL         |       |           |           |         |            |
| Stafford     |       |           |           |         |            |
| Subsidized   |       |           |           |         |            |
+--------------+-------+-----------+-----------+---------+------------+
| FFEL         |       |           |           |         |            |
| Stafford     |       |           |           |         |            |
| Unsubsidized |       |           |           |         |            |
+--------------+-------+-----------+-----------+---------+------------+
| FFEL PLUS    |       |           |           |         |            |
| (Parent &    |       |           |           |         |            |
| Graduate     |       |           |           |         |            |
| Student)     |       |           |           |         |            |
+--------------+-------+-----------+-----------+---------+------------+
| **Totals**   |       |           |           |         |            |
+--------------+-------+-----------+-----------+---------+------------+

**Average Outstanding Principal Balance is calculated by dividing Column
C by Column B. The total average outstanding principal balance for all
loans (bottom right cell) must be at least \$3,000**

**PURCHASE PRICE CALCULATION**

Total Outstanding Principal Balance (Total from Column C)
\[\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.\_\_\_\_\]

Total Borrower's Accrued/Unpaid Interest (Total from Column D)
\[\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.\_\_\_\_\]

Total Amount Outstanding (Total of two above amounts)
\[\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\] times 0.97
equals

Total Amount of Seller's Offer
\[\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.\_\_\_\_\] (To be inserted
above in certifying paragraph)

Signature of Authorized Official:

Typed Name and Title of Authorized Official:

Typed Name and Phone Number of Seller's Contact Point:
[\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}

E-Mail Address of Seller's Contact Point:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Submit this "Offer to Sell" as a PDF attachment to an e-mail addressed
to <ffel.agreementprocess@ed.gov> with a Subject Line of "Offer to Sell
for Purchase Date of \<insert Purchase Date\>."