BofA suspending federal student loan program

Bank of America Corporation will suspend its federally-backed student loan program by December 5, the company said in a letter to colleges and universities on Friday, as the US gets ready to end the program entirely.

A number of becomes banks have said they would exit the Federal Family Education Loan Program, this year.

The Student Aid and Fiscal Responsibility Act of 2009 would replace the FFELP program with direct government loans. It has passed the US House of Representatives and is awaiting a Senate vote, but it strongly supported by President Obama and widely expected to become law.

A spokeswoman for the Charlotte, North Carolina-based Bank of America confirmed the validity of the letter, and said the bank would continue to collect payments on customers' existing loans.

Bank of America was the fourth largest lender under the program in fiscal year 2008, issuing USD 4.8 billion in new loans, according to US Department of Education data.

The program, created in 1965, is a public-private program designed to allow banks to make students loan backed by government guarantees.