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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.



| | Sincerely, 
| | -----------
| | /s/        
| | Arne Duncan