The Department of Education yesterday announced that it will purchase student loans on a short-term basis that were issued for the 2007-2008 academic year, using untapped authority Congress granted it in legislation enacted in May.

By purchasing these additional loans from lenders, the DOE hopes that the lenders will be able to use the proceeds to pay off so-called warehouse loans that they tapped last year to originate loans. That in turn will free up capacity for making second disbursements for the current academic year and additional lending the following year.

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