To Our Valued School Customers:

On May 7, the Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715) was signed into law. The measure positively addresses the needs of students and parents by stabilizing the federal student loan program, increasing annual and aggregate unsubsidized Stafford loan limits, and allowing more parents to take advantage of low-cost PLUS loans.

Implementation of H.R. 5715

As of June 9, we will begin processing Stafford loan applications reflecting the new increased loan limits for AY 2008-2009. We pledge to work closely with you to ensure all students and parents are aware of this good news.

Sallie Mae is working with the U.S. Department of Education to ensure our loans are made in compliance with the requirements of the Secretary’s loan purchase program. As part of this implementation process and based on our understanding of the Department's program, we are offering a new FFELP borrower benefit that applies to all schools:

For Stafford, Parent PLUS, and Graduate PLUS Loans originated by a Sallie Mae lender brand and guaranteed on or after June 9, 2008, borrowers will be eligible to receive a 0.25 percentage point interest rate reduction by making payments using automatic debit. For loans serviced by Sallie Mae, this benefit will remain available during active repayment for as long as the borrower’s monthly payment is successfully deducted from the borrower’s bank account. (Please note that all Sallie Mae lender brands will honor our prior borrower benefit offerings on all FFELP loans that are guaranteed prior to June 9, 2008.)

Turning to the 1% federal default fee, for loans made to your students and guaranteed by USA Funds or NELA through June 30, 2008, the fee will continue to be paid on the borrower’s behalf. For loans guaranteed beginning July 1, 2008, the 1% federal default fee will be charged, and not paid on behalf of the borrower. Some guarantors, however, may decide to pay the fee on behalf of the borrower. We suggest you contact the guaranty agencies your school works with to learn what their plans are.

Sallie Mae’s continuing commitment to students and schools

For the past several months, the federal student loan program has been characterized by historic change and transformation. During this time, Sallie Mae’s commitment to students, schools, and the FFELP did not change. As other lenders left the program or opted to offer FFELP loans only at select schools, we have funded every eligible Stafford, Parent PLUS, and Graduate PLUS loan application we have received from every student and every school, and we will continue to do so well into the future, all while leading the industry to proactively find solutions to bring stability for your students.

We thank you for your support as we continue to work together with Congress, the Administration, and the Department of Education to ensure that America’s students and their families have the financial resources they need to pursue a higher education.

As the Department of Education works to finalize the implementation details of H.R. 5715, I encourage you to help them understand how important it is for your students to retain their original FFELP servicing on loans that are sold to the Department. You can do so by sending an email to ffelinfo@ed.gov.

Sincerely,

Barry Feierstein
Executive Vice President