Ea38

LOAN PURCHASE PROGRAMS ELECTRONIC ANNOUNCEMENT #38
Date:

December 3, 2008

To:

FFEL Program Community

From:

James A. Manning, Acting Chief Operating Officer
Federal Student Aid

Subject:

Submission of “Offer to Sell” Requests Under the 2007-2008 Short-Term Purchase
Program

In Electronic Announcement #36 we attached the text of the Notice and the Master Loan Sale
Agreement 2007-2008 (2007-2008 MLSA) that was published in the Federal Register on
December 2, 2008 announcing the terms and conditions of the Department’s 2007-2008 ShortTerm Purchase Program. Electronic Announcement #37 provided instructions for the
submission of 2007-2008 MLSA execution documents. This announcement provides format and
submission instructions for the “Offer to Sell” that must be submitted by a loan holder wishing to
sell 2007-2008 academic year loans to the Department.
Note that, unlike the process required for the sale to the Department of 2008-2009 academic year
loans, a “Notice of Intent to Participate is not required for the 2007-2008 Short-Term Purchase
Program.
Thank you for your continued support of these FFEL Loan Purchase Programs.
Attachment

Paperwork Burden Statement
According to the Paperwork reduction Act of 1995, no persons are required to respond to a
collection of information unless such collection displays a valid OMB control number. The
valid OMB control number for this information collection is 1845-0087. The time required to
complete this information collection is estimated to average 2 hours per response, including the
time to review instructions, search existing data resources, gather the data needed, and complete
and review the information collection. If you have any comments concerning the accuracy of
the time estimate(s) or suggestions for improving this form, please write to: U.S.
Department of Education, Washington, D.C. 20202-4537. If you have comments or concerns
regarding the status of your individual submission of this form, write directly to: Policy
Liaison and Implementation, Federal Student Aid, U.S. Department of Education, 400 Maryland
Avenue, S.W., UCP3, 11th floor, Washington D.C. 20202-4537.

United States Department of Education
Federal Family Education Loan Program
2007-2008 Short-Term Purchase Program

“OFFER TO SELL” 2007-2008 ACADEMIC YEAR FFEL LOANS
DECEMBER 3, 2008

This document provides the format and instructions for a lender/holder’s (now called the “Seller”) submission
of an “Offer to Sell” 2007-2008 FFEL Program loans to the U.S. Department of Education (the Department).
Note that a Seller may not submit an “Offer to Sell” earlier than the day it submitted its Adoption Agreement
for the Master Loan Sale Agreement 2007-2008 (2007-2008 MLSA) to the Department, as provided in
Electronic Announcement # 37. As noted in earlier documents, the Department will only purchase loans under
this program once each week with the Purchase Date generally being Monday (see below for holiday
exceptions). The lender/holder’s “Offer to Sell” is due no later than noon on the Wednesday second preceding
the Purchase Date.
This document also describes the steps that the Seller must complete for any weekly sale of 2007-2008
academic year FFEL Program loans and the deadlines for completing those steps. In a separate Electronic
Announcement we will provide the specifications and submission requirements for the required Bill of Sale and
the data files that must be submitted to the Department’s servicer.
“Offer to Sell” 2007-2008 Eligible Loans
As provided in Section 1 of the 2007-2008 MLSA, each Seller that wishes to sell 2007-2008 academic year
loans to the Department for a given week must submit an “Offer to Sell” for that week. The Seller must submit
its “Offer to Sell,” in the format provided in this document, as a PDF attachment to an e-mail that is sent to
[email protected], with a subject line of “Offer to Sell for Purchase Date of .” As stated in the 2007-2008 MLSA, the Department will not purchase loans from a lender in a
given week unless the average outstanding principal balance of the loans offered by that lender for that week is
at least $3,000. If the Department determines that the average balance of loans in an offer is not at least $3,000
the entire offer from that Seller will be rejected for that week.
For each week, the Department will consider those “Offers to Sell” that it receives by the stated deadline date
(the second Wednesday preceding the Purchase Date) and will calculate how much of each Seller’s offer the
Department will purchase (see below for a discussion of that calculation) and will notify each Seller by e-mail
addressed to the contact person identified on the Seller’s “Offer to Sell” of the accepted amount.

Offer to Sell 2007-2008 Academic Year Loans
Page 2
Calculation of Amount of Offer Accepted for Purchase
The Department will purchase all Eligible Loans offered for sale by Sellers for the week if the amount needed
to purchase those loans does not exceed $500 million. If the amount needed to purchase all loans included in
timely, qualifying offers for a week exceeds $500 million, the Department will use the following process to
calculate the portion of the $500 million that will be accepted from each Seller’s offer –
1. Determine the percentage of each Seller’s total 2007-2008 FFEL Stafford and PLUS holdings (as of
November 19, 2008) to the total 2007-2008 FFEL Stafford and PLUS holdings for all loan holders.
2. Calculate the ratio of each Seller’s holding percentage from Step 1 to the holding percentages of all
Sellers submitting offers for the week.
3. Apply the ratios calculated in Step 2 to the $500 million available for the maximum week to determine
each Seller’s initial share.
4. The amount accepted for each Seller will be the lesser of the amount calculated in Step 3 or the amount
offered by the Seller in its “Offer to Sell”.
5. In the event that the amount determined in Step 4 for one or more Sellers is the offered amount (as
opposed to the higher calculated amount from Step 3) the residual amount still available from the $500
million will be allocated by calculating the percentage of each Seller’s shortfall amount (amount offered
by the Seller less amount calculated under Step 4) to the sum of all Seller’s shortfall amounts and
applying that percentage to the residual funds available. This additional amount will be added to the
amount calculated in Step 4 unless the total is greater than the Seller’s offered amount, in which case the
Seller’s offered amount will be used. In the event that funds still remain this step will be repeated for
any Seller whose total does not yet equal their offered amount.
6. Note that no one Seller will be approved for more than $425 million (85% of the $500 million) in a
week unless all other Sellers’ requested offers have been met.
As noted earlier, once the Department has calculated the amount of a Seller’s offer the Department will inform
each Seller of the accepted amount in an e-mail addressed to the contact person included on the Seller’s “Offer
to Sell.”
Steps in Loan Purchase Process
Once the Department has informed the Seller of the amount of the Seller’s offer the Department will accept for
purchase, the Seller and the Department’s servicer will coordinate submission of the loan conversion files (see
upcoming, Electronic Announcement #39), consistent with the schedule and process discussed below, so as to
consummate the sale on the scheduled Purchase Date. The Seller’ servicer must cooperate with the
Department’s servicer to resolve any data file exceptions, including loan eligibility issues. The final sale must
have a total value (97 percent of the outstanding principal plus outstanding accrued borrower interest as of the
Purchase Date) equal to or only slightly less (in the event that one or more loans have lost their eligibility to be
sold) than the amount accepted by the Department.

Offer to Sell 2007-2008 Academic Year Loans
Page 3
The Department’s servicer will prepare and forward to the Seller’s servicer for validation a pre-sale conversion
file with totals. The Seller’s servicer must review this file and confirm the pre-sale totals. The Seller must use
these totals and related reports to complete the required Bill of Sale and the associated Final Loan Schedule
Summary of Loans Sold (see Exhibit B of the 2007-2008 MLSA).
For illustrative purposes only, the chart below presents a sample timeline with deadlines, for an offer that will
result in a Purchase Date of Monday, December 22. All weekly sales begin with the submission by Sellers of
“Offers to Sell” no later than noon on the second Wednesday preceding the Purchase Date - December 10 in
this example. Note that the same day of week activities apply to each activity even when the Purchase Date is
moved from a Monday to a later day because of a Federal holiday (see below for list of those exceptions). All
times below are Eastern Time.
2007-2008 FFEL Short-Term Purchase Program
Step/Activity
Performed By
Completed No Later Than
Step One – “Offer to Sell” is
submitted to Department’s FSA
Office by e-mail to:
[email protected].
Step Two – Determination of amount
of Seller’s offer that will be
accepted.
Step Three – Seller informed by email of accepted amount of offer
the Department will purchase.
Step Four – Submission to the
Department’s servicer of
conversion file for accepted
amount.
Step Five – Editing of conversion file
and submission of Loan Listing to
Seller or Seller’s servicer.
Step Six – Submission of Bill of Sale,
with supporting Schedule to
Department' servicer by e-mail to:
[email protected].
Step Seven – Creation of internal
payment invoice.
Step Eight – Auditing of payment
invoice and submission of Funding
Request to the Department’s Finance
Office.
Step Nine – Payment authorization
sent to U.S. Treasury
Step Ten – Payment made to Seller’s
account
Step Eleven – Loans converted to
Department’s servicer’s system

Seller or Seller’s servicer

Noon, Wednesday, December 10

Department’s Federal
Student Aid Office

Noon, Thursday, December 11

Department’s Federal
Student Aid Office

Noon, Thursday, December 11

Seller or Seller’s servicer.

Noon, Monday, December 15

Department’s servicer

Noon, Wednesday, December 17

Seller of Seller’s servicer

7:00 AM, Thursday, December 18

Department’s Federal
Student Aid Office
Department’s Federal
Student Aid Office

5:00 PM, Thursday, December 18

Department’s Finance
Office
U.S. Treasury

10:00 AM, Monday, December 22

Department’s servicer

5:00 PM. Monday, December 22

Noon, Friday, December 19

5:00 PM, Monday, December 22

Offer to Sell 2007-2008 Academic Year Loans
Page 4
Exceptions: While Offers to Sell must still be submitted by the second Wednesday preceding the Purchase Date
(usually the second following Monday), for the weeks that include the Federal holidays of December 25, 2008,
January 1, 2009, January 19, 2009 and February 16, 2009 the Purchase Dates will be as follow –
Purchase Date Exceptions
Offer to Sell Submission Date
Purchase Date
Wednesday, December 17, 2008
Tuesday, December 30, 2008
Wednesday, December 24, 2008
Wednesday, January 7, 2009
Wednesday, January 7, 2009
Tuesday, January 20, 2009
Wednesday, February 4, 2009
Tuesday, February 17, 2009
As noted above, we will provide in Electronic Announcement #39 information on contact points with the
Department’s servicer, data file specifications, and submission instructions.

“OFFER TO SELL”
PURSUANT TO MASTER LOAN SALE AGREEMENT 2007-2008
To: U.S. Department of Education

_________________, 200___

From: ____________________________________________________________
Seller’s Lender ID (LID): ___________________________________________________________
Proposed Purchase Date: [MM/DD/CCYY] (See page 4 of Electronic Announcement #38 for allowable dates)
Certification: The Seller by submitting this “Offer to Sell” offers to sell to the U.S. Department of Education Eligible
Loans, as defined in Section 3 of the Master Loan Sale Agreement 2007-2008, on the Purchase Date proposed above at a
total purchase price of $_. The Seller also certifies that it will sell such
loans to the Department up to the dollar amount of this offer that is accepted by the U.S. Department of Education.

SUMMARY OF LOANS OFFERED FOR SALE
Column A
Loan Type

Column
B
Number
of Loans

Column C

Column D

Column E

Column F

Outstanding
Principal
Balance at
Purchase Date

Accrued
Borrower
Interest at
Purchase Date

Total Value
of Loans

Average
Outstanding
Principal
Balance

FFEL Stafford
Subsidized
FFEL Stafford
Unsubsidized
FFEL PLUS (Parent
& Graduate Student)
Totals
Average Outstanding Principal Balance is calculated by dividing Column C by Column B. The total
average outstanding principal balance for all loans (bottom right cell) must be at least $3,000

PURCHASE PRICE CALCULATION
Total Outstanding Principal Balance (Total from Column C)

[$_____________________.____]

Total Borrower’s Accrued/Unpaid Interest (Total from Column D)

[$_____________________.____]

Total Amount Outstanding (Total of two above amounts) [$__________________________] times 0.97 equals
Total Amount of Seller’s Offer [$___________________.____] (To be inserted above in certifying paragraph)
Signature of Authorized Official:
Typed Name and Title of Authorized Official:
Typed Name and Phone Number of Seller’s Contact Point:
______________________________
E-Mail Address of Seller’s Contact Point: ________________________________________________________
Submit this “Offer to Sell” as a PDF attachment to an e-mail addressed to [email protected] with a
Subject Line of “Offer to Sell for Purchase Date of .”