USA Funds Submits Plan to Serve as Lender of Last Resort

As required by the U.S. Department of Education, USA Funds^® has submitted proposed rules and operating procedures for serving as a lender of last resort in the Federal Family Education Loan Program, if necessary.

“Although our plans are in place to implement lender of last resort if called on, we urge federal authorities to take all necessary steps to ensure capital is available to make conventional FFELP loans, so lender of last resort loans truly are used only as a last resort,” said Carl Dalstrom, USA Funds president and CEO.

USA Funds’ submission to the Department spells out how it will identify the need for lender of last resort loans and the entities willing to serve as lenders of last resort, procedures for processing lender of last resort loans and the certification of schools as eligible for lender of last resort.

USA Funds will serve as or designate lenders of last resort in the eight states it serves as designated guarantor of FFELP loans — Arizona, Hawaii, Indiana, Kansas, Maryland, Mississippi, Nevada and Wyoming — and in additional states, subject to capacity and financial constraints, as requested by the Department.

The final plan will be shared with school- and lender-partners once approved by the Department. USA Funds also will post subsequent information about lender of last resort for borrowers, schools and lenders on its Web site and provide updates in future editions of USA Funds Education Access Report.

The Department previously published guidance regarding lender of last resort in two Dear Colleague letters: GEN-08-03, “Lender-of-Last-Resort Services in the Federal Family Education Loan Program” and GEN-08-05, “FFEL Lender-of-Last-Resort Program.”

You will need Adobe Reader to access the Dear Colleague letters, posted on USA Funds’ Web site.