Session GA05

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Session GA-05

• Lender ID Assignment Rules and Process
• Angelita Dozier
• U.S. Department of Education

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Background

• HEA Sec 435(d)(1) and 34 CFR Section 682.200
  identify entities eligible to participate in the
  Federal Family Education Loan (FFEL) program
• Currently there are three predominant
  participants in the FFEL program
• traditional lenders (banks credit unions),
• schools, and
• institutions using an eligible lender trustee
  (ELTs)
• The purpose of the LID is to track participants
  in the FFEL program

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Enrollment Process

• All institutions are required to work with a
  guaranty agency (of their choice) to initiate the
  LID enrollment process. All requests must come
  from the guaranty agency the guaranty agency
  submits a request on behalf of the lender to the
  Department
• The guaranty agency or lender may provide
  supporting documentation directly to the FSA LID
  Process Team

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Request for New, Reactivation, or Reassignment
LID

• Requests should be emailed to fps.lidprocess_at_ed.go
  v
• The request from the guarantor must provide the
  following
• Tax-ID Number of the lender
• Name of lender
• Address of lender
• Contact person at the lending institution

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Request for New, Reactivation, or Reassignment
LID (cont)

• Phone number of the contact person
• Fax number of the contact person
• Email address of the contact person
• Certification that the lender is an eligible
  lender according to 682.200(b)
• Assurance that all parties are in communication
  and have entered into agreements

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Request for New, Reactivation, or Reassignment
LID (cont)

• Certification for not-for-profit status (if
  applicable) and assurance that lender will not
  violate 50 rule
• For ELT arrangements, additional documentation is
  required

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Documentation Required for ELT Arrangement

• Financial statements
• Financing plan
• Business cases
• Agreement with ELT and beneficial holder

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ELT Arrangement

• A lender may request a LID as an ELT for
  organizations that are not considered eligible
  lenders also referred to as beneficial holders
  of student loans
• Lenders should have a comprehensive understanding
  of the beneficial holder (i.e. plans to originate
  and sell, originate and hold, buy, etc.)

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School As Lenders

• No new requests for schools to act as a lender
  can be approved - 34 CFR 682.601
• No school can make or originate loans unless they
  were an eligible lender as of Feb. 7, 2006 and
  must have made one or more FFEL loans on or
  before April 1, 2006

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School As Lenders (cont)

• Schools using an ELT arrangement would need to be
  in a contract with the trustee on or before Sept.
  30, 2006 and the ELT would have to hold at least
  one loan in trust on behalf of the school on
  Sept. 30, 2006

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Reassignment

• A lender may request to reassign their LID(s) to
  another lender
• FSA expects all participating entities to notify
  the Department of any pending mergers and/or
  acquisitions

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Reassignment (cont)

• Scenarios that may result from a
  merger/acquisition
• Both parties participate in FFEL and will
  continue to maintain separate LIDs
• Both parties participate in FFEL and LIDs will be
  merged
• Transfer of ELT/beneficial holder to new ELT

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Deactivation

• Reasons for deactivation of a LID
• Merger/Acquisition of lender
• Lender no longer wants to participate in the
  program
• FSA/CFO may request deactivation due to
  non-billing for the last two quarters

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Deactivation (cont)

• ED/FSA may deactivate due to outstanding
  audit/program review issues or termination from
  the FFEL program
• Lender sells their entire portfolio to another
  lender and wants to exit the program

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Deactivation (cont)

• FSA will complete the following steps prior to
  deactivating a LID
• Determine if money is owed to the Department or
  the lender
• Determine if all Consolidation Loan Rebate Fees
  have been paid

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REQUEST FOR ADDITIONAL LID(s)

• LIDs are not assigned to accommodate a
  contractual or organizational issue that a FFEL
  lender has with their existing servicer(s)

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REQUEST FOR ADDITIONAL LID(s) (cont)

• The request for additional LID(s) will be denied
  if the lender needs to segregate the portfolio
• Due to multiple servicers
• Due to varying borrower benefit programs
• Due to a desire to track school activity or
• Due to accounting/finance purposes

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Hold Procedures

• Placing a lender on hold allows FSA to suspend
  interest and special allowance payments to the
  lender for non-compliance or other issues
• Reasons for placing a lender on hold
• Failure to submit required annual compliance
  audits
• Non-payment of fines or fees as result of audit
  or program review or
• Other negligent reasons

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Organization Participation Agreement (OPA)

• A completed and signed OPA indicates that the
  lender, servicer, or eligible lender trustee
  agrees to submit data on the quarterly Lender
  Reporting System (LaRs) to the U.S. Department of
  Education and to receive data from the Department
  electronically

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U.S. Department of Education Lender/Servicer
Organization Participation Agreement
 
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OPA Recertification Process

• Every two (2) years a lender should submit a
  newly signed OPA
• Beginning 2008, all lenders will receive an email
  requesting their OPA to be submitted and
  recertified
• If a lender does not provide a new OPA within a
  reasonable amount of time, the lender will be
  deactivated

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Lender Application Process (LAP)

• Application for the lender to provide demographic
  data, relationship information with guarantor and
  servicer, and bank account data to be processed
  by the Department of Education

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Contact Information

• We appreciate your feedback and comments. The LID
  Process Team can be reached at
• Phone [phone]
• Email fps.lidprocess_at_ed.gov
• Fax [phone]

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