The Education Department said Friday it plans to turn over the $9 billion portfolio of a financially troubled student-loan guarantee agency to Sallie Mae, the Student Loan Marketing Association.
Sallie Mae will handle the portfolio of the Higher Education Assistance Foundation, or HEAF, one of the largest guarantee agencies in the Guaranteed Student Loan program.HEAF is in financial difficulty because of a loan portfolio that included a high percentage of loans to vocational schools whose students defaulted in large numbers.
Officials said about $3 billion was in default.
Under the federal loan program, students borrow from banks and one of the non-profit guarantee agencies insures the loan. The government then reinsures the loan.