Spellings said in a statement that the Education Department was working with the Treasury Department and the Office of Management and Budget to assure the stability of the Federal Family Education Loan Program and Direct Loan Program.

"We recognize that the current economic situation has created real financial challenges for students and their families, who are increasingly concerned about how they can secure loans to help cover college costs," Spellings said. "I want to reassure students and their families that federal student aid -- both grants and loans -- remains available to eligible students."

Spellings said the Education Department will continue the loan purchase and participation interest programs announced for the 2008-09 school year for the 2009-2010 year. She said the Bush administration also intends to provide liquidity support to back the FFELP loans.

"The unprecedented credit market conditions throughout the past several months have clearly impacted the student loan market," Treasury Secretary Henry M. Paulson Jr. said. "These necessary measures will allow for more liquidity in this market and should help to prevent the financial turmoil from hurting opportunities for our students."