May 21 (Bloomberg) -- SLM Corp. and other educational lenders in the U.S. will receive ``very favorable'' terms from the Education Department for disposing of loans they can't sell to investors, one specialist on the market said.

Department officials met with lenders in Washington to provide details about a program to buy loans, Mark Kantrowitz, publisher of FinAid.org, a Web site about student loans, said yesterday in an interview on Bloomberg Television. The department will offer to buy the loans from the lenders at par value plus a rebate of 100 basis points and $75, or take over loans for a year before they revert to the lender, he said from Pittsburgh.

President George W. Bush signed a law on May 7 letting the Education Department buy loans that private lenders have been unable to sell amid credit tightening triggered by the collapse of subprime mortgages. Members of Congress and trade groups have urged the department to ensure the supply of federally guaranteed student loans will meet demand from students.

``The lenders got pretty much what they were thinking,'' said Kantrowitz, who said he learned of the meeting's outcome from individuals who were separately briefed by Education Department officials. ``We will see a slowing down of lenders leaving the program, so students should be able to get loans.''

Dozens of college lenders have stopped making federally guaranteed loans because the U.S. cut subsidies and investors have shunned bonds backed by student loans. Students in the U.S. have lost access to more than $6.7 billion as a result.

The Education Department's press office in Washington didn't respond to requests for comment before and after the meeting. Sallie Mae spokeswoman Martha Holler didn't return calls requesting comment.

FinAid.org is owned by Monster.com and receives advertising money from Citigroup Inc., the 80 percent owner of educational lender Student Loan Corp.

To contact the reporter on this story: Oliver Staley in New York at ostaley@bloomberg.net.

Last Updated: May 21, 2008 00:01 EDT