Following is the text of the May 13, 2008 communication to college presidents from HESC President James C. Ross regarding recent improvements in student loan access:
In these uncertain times for student loans, I want to continue communicating with you and assure you that the Federal Family Education Loan Program (FFELP) remains strong. While there are challenges facing certain sectors, most borrowers will not have difficulty obtaining a FFELP loan this coming academic year. To date, not a single borrower in New York State has been unable to obtain a FFELP loan.

Many lenders remain in the program. HESC currently has 80 lenders available to borrowers. Media coverage of problems in the private loan business, driven by liquidity issues, also implies that there has been a wholesale defection of lenders from FFELP. Some lenders have withdrawn from the program or curtailed certain lending activity until the market stabilizes. However, there are many lenders that intend to continue to build a long term customer base by remaining in the student loan business.

As I am writing to you, the situation improves. On May 7, President Bush signed into law the Ensuring Continued Access to Student Loans Act of 2008. This new law will provide lenders much needed liquidity through a secondary market, granting substantial relief to participating lenders which should increase loan availability, stabilize the market and restore confidence in FFELP. Lenders that access this secondary market will be required to use those funds to continue participation in FFELP.

To ensure continued access to FFELP loans for schools and students who may be affected by redefined criteria, HESC is working closely with the U.S. Department of Education to finalize contingency plans to offer alternative lenders to schools should they ever need them, or to originate loans using advances from the U.S. Treasury in instances where a lender is not available. While HESC believes it is essential to be ready for these occurrences, implementation appears unlikely.

Throughout these uncertain times, HESC has been proactive in responding to the needs of students, families, and colleges. We recently e-mailed student borrowers who were affected by a lender’s decision to suspend FFELP loan origination, to provide details of how to sign a new promissory note, ensuring there were no processing delays. In addition, HESC has adapted the e-MPN process to reflect lender options based upon individual schools, which will assist borrowers in making decisions and ensure compliance with recent legislation.

During this uneasiness, some are advocating that schools turn to the Federal Direct Student Loan program. This advice is short sighted. The co-existence of FFELP and Direct Loans has improved service and efficiency in the programs. FFELP has demonstrated capability to absorb significant volume and offers good rates and benefits to students. Schools who participate in the FFELP endorse its simplicity, service and efficiency.

HESC has been and always will be responsive to our customers; you provide feedback and suggestions on how you process with us, and we greatly value your opinion and insight. HESC remains a leader in electronic processing, customer service and default management, and intends to continue to deliver high quality programs and services tailored to fit your needs and those of the students you serve.

HESC is sharing a new resource page on the HESC Web site, which specifically addresses student loan market conditions, provides details of actions we are taking, up to the minute resources and FAQs for school administrators. As always, you or your staff are welcome to contact any of our Customer Relations staff at any time. Our Client Relations Managers and our Priority Services team are ready to assist your aid office in any way we can.

I hope I have clarified recent developments in the student loan industry and reassured you of HESC’s commitment as your guarantor. Please let me know if I can be of any assistance.