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Gov't Ready to Boost Student Loan Liquidity: WSJ

Reuters
Monday, 5 May 2008 | 7:06 AM ET

The U.S. Education Department will be ready to process emergency advances for student loans by June 1, the Wall Street Journal said on Monday, citing a letter to be sent Monday to state agencies that would enforce the program.

Under the plan, the Education Department would temporarily be allowed to pump liquidity into the sluggish secondary market for federally guaranteed student loan debt.

The move comes under a student loan market stabilization plan that is aimed at helping lenders who have warned of a potential loan shortage in coming months as millions of students seek financial aid for college.

The plan, expected to be signed into law, is also meant to let the Education Department funnel capital for loans to state guaranty agencies under a "lender of last resort" program for students and for colleges if they faced loan shortages from other sources.

Education Department officials were not available immediately for comment.

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