Funding Update from T.H.E. - August 22, 2008

Under the "Ensuring Continued Access to Student Loans Act of 2008" we are required to fund loans ourselves, on a weekly basis submit a list of these loans to the Department of Education, and then within seven to ten days be able to receive these funds back from them in order to fund new loans. The combination of activities could mean funding availability every three weeks. We are exploring every avenue possible to find funding for this short time period but the problems in the capital markets have made access to funding very difficult. We currently have about $15 million available and began using these funds in late August. With more applications than funds available, we will be giving priority to students with prior borrowing relationships with us who are graduating in the Spring of 2009 or earlier. We hope to have figures available in this section of our website shortly to allow borrowers to anticipate the timeframe to get their loan funded.

Funding Update from T.H.E. - August 5, 2008

Now that August 1 has come and gone, we at NorthStar are extremely disappointed that our Total Higher Education Loan Program is still unable to secure funds through ECASLA (the Department of Education’s plan) or any other source in order to disburse FFEL loans. Unfortunately, the potential alternative we mentioned in a previous update is not viable at this time.

In spite of this delay, we are expecting to participate fully in ED’s loan program as soon as it’s up and running. As you may know, they are still in the process of establishing the necessary logistics (e.g., custodians, warehouses) that will allow lenders to access loan funds.

We hope to make loans available in late August, based on ED’s latest estimates. As soon as we know more, we’ll give you another update.

We greatly appreciate the support of all of you who have patiently waited for us to get access to funding, but we know that many of you cannot wait several more weeks. We understand if you need to make other arrangements.

When will T.H.E. begin funding disbursements for 2008 - 2009 loans under the Department of Education's new plan?

7/2/08 Update

The Department of Education recently published the official Federal Register notice, which outlines the terms and conditions of the Department's authority to purchase loans under the Ensuring Continuing Access to Student Loans Act of 2008. The Department's plan is a crucial step in providing liquidity to student loan lenders at a time when the current conditions in the financial capital markets prevent most lenders from making FFELP loans available to students.

Although lenders now have the basic information about how loans will be funded and purchased under the plan, we still don’t know a lot about the mechanics of the process. And those details are absolutely essential to figuring out how and when students will get their money. There is a definite sense of urgency here, students and schools can help by stressing to the Department that we are already well into peak season with application processing. It doesn’t begin in August; it’s happening right now. If the Department can fast-track these steps, the delays for students and schools could be minimized.

The Department of Education has put in place several requirements that will need to be implemented before a lender can access funding through the Department's program. They include:

- Lenders submit a formal application to participate in the program. The Department will then need time to review, process and approve a lender’s application.

- Lenders must set up a relationship with a third party to act as a "custodian" of loans funding through the Department's program. That process can only begin once the official documents providing terms, conditions and guidelines have been received from the Department by the lender.

-Lenders will only be able to access funding from the Department through the program after the two requirements above are met. In addition, lenders need to fund the loans prior to being able to access funding from the Department. Since it sounds like lenders can only request funds once a week, and it could take 7-10 business days for the Department to get the funds to the custodian, lenders anticipate needing to fund up to a rolling three weeks worth of disbursements before getting funds from Department. Lenders need the final details from Department officials before these short-term, non-Department funding lines can be put in place.

T.H.E. is currently reviewing the details provided thus far from the Department of Education, and assessing implementation requirements and potential impacts on systems. For the reasons above, it is still too early to determine a specific date when we can fund first disbursements.