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Lender Participation
A lender must enter into agreement with guarantors and receive approval from the U.S. Department of Education (ED) before making Federal Family Education Loan Program (FFELP) loans.  During the course of program participation, loans made by a lender may undergo changes in ownership, servicing, or even guarantee.

All approved lenders must execute an ISAC Lender Agreement prior to participating in FFELP with ISAC as the guarantor. To participate as an ISAC-approved lender, lenders and ISAC must electronically exchange loan guarantee data.  ISAC also conducts compliance reviews to determine if approved lenders are complying with federal regulations, statutes, and rules.

The Common Manual provides additional information concerning federal lender participation. ISAC Rules, Section 2720.20 provide the requirements to participate with ISAC as a guarantor in the FFELP Program.

"Ensuring Continued Access to Student Loans Act of 2008"

In response to concerns about the availability of student loans for the 2008-09 academic year, the "Ensuring Continued Access to Student Loans Act of 2008" was passed.  As part of the legislation, ED gained authority to provide FFELP lenders with access to liquidity to make student loans.  For information on lenders' requirements for participation, as well as other provisions of the Act, visit ED's "Ensuring Continued Access to Student Loans" site.

One Lender/One Holder Requirement – [ISAC Rules, Sections 2720.41 and 2720.42]

There is also a One-Lender/One-Holder Requirement for ISAC-guaranteed loans. All of a borrower’s outstanding ISAC-guaranteed loans must be made by the same lender or sold by a lender to the same holder.

Federal Consolidation Loans – [ISAC Rules, Section 2720.55]

ISAC will guarantee Federal Consolidation Loans based on the following policy:

  • A defaulted loan(s) may be included for consolidation if through ISAC the total balance of all loans included at the time of consolidation is $5,000 or greater.  Borrowers may not consolidate a defaulted Federal Direct Loan or a defaulted loan held by another guarantor through ISAC.
  • Other than a Federal Direct Loan, a borrower may not include for consolidation any loan currently held by the ED (i.e., subrogated loan).

If you would like additional information, contact ISAC’s Lender Services department at lenderservices@isac.org.

© 2003-2007 Illinois Student Assistance Commission