Creating a Successful RFIRFP and Interpreting the Responses

1
The following is a presentation prepared for
PASFAAs 2008 Fall Conference in State College,
PA October 12-15, 2008
2
Creating a Successful RFI/RFP and Interpreting
the Responses

• Presented by
• Patty Peterson PNC Bank

3
Agenda

• Definition of RFI and RFP
• Preparing for a RFI as school
• Deciding what is important to your institution
• Creating the Document
• How will you evaluate your responses
• Sending your RFI to Lenders
• Some helpful hints when asking for calculations
• What happens when a lender receives an RFI

4
Agenda Cont.

• Interpreting your RFI responses
• Who will be involved in the decision making
  process
• Will you need to ask follow up questions
• Notifying lenders of the results
• Questions / Comments

5
Definitions

• RFI Request made typically during the project
  planning phase where a buyer cannot clearly
  identify product requirements, specifications,
  and purchase options. RFIs clearly indicate that
  award of a contract will not automatically
  follow.
• RFP Document used in sealed-bid procurement
  procedures through which a purchaser advises the
  potential suppliers of statement and scope of
  work, specifications, schedules or timelines,
  contract type, data requirements, terms and
  conditions, description of goods and/or services
  to be procured, general criteria used in
  evaluation procedure, special contractual
  requirements, technical goals, instructions for
  preparation of technical, management, and/or cost
  proposals. RFPs are publicly advertised and
  suppliers respond with a detailed proposal, not
  with only a price quotation. They provide for
  negotiations after sealed proposals are opened,
  and the award of contract may not necessarily go
  to the lowest bidder. See also invitation to bid,
  request for tenders, and request for quotations

6
Why do I need an RFI or RFP?

• Legislation does not require a school to conduct
  an RFI or RFP
• However, these processes will provide

• objectivity in your decisions on what lender to
  include on recommended lists
• proof of how you made your selections
• a guideline for maintenance on future adjustments
  or changes

7
How do I begin?

• Establish a Committee
• Establish a Timeline
• Development of the RFI/RFP
• 1. FFELP and/or Alternative
• Distribution and Collection
• Evaluation and Decision

8
Establishing a Committee

• Include areas from the campus most affected by
  your decisions or those areas that could offer
  constructive advice
• Consider Financial Aid Representative, Billing
  Office Representative, Student Representative and
  Student Services Representative

9
Establish a Timeline

• When will the RFI be ready to go out to lenders?
• How much time will be provided to the lender for
  completion?
• How much time will the committee need to review
  the information?
• Estimates for timeframes are normally around 3-4
  months

10
Development of the RFI/RFP

• What questions do you want lenders to answer?
• Common Questions asked
• History in the Business
• Student upfront and back end benefits
• Customer Service
• Default Rate
• Technical Ability
• a. Electronic MPN
• b. Electronic Entrance
• c. EFT vs Check delivery of funds
• d. Flow of process and preferred
  guarantor

11
Development Cont.

• Make sure to only include the questions you are
  going to review
• Too many irrelevant questions could slow down the
  process on the lenders side, and your committee
  could become overwhelmed

12
Development Cont.

• How are you going to score the RFI/RFP?
• Some schools have weighted certain questions and
  given overall percentages to the question
• Utilizing an academic scale seemed to work well.
  Give a grade from an A to D on each question
  A4pts B3pts C2pts and D1pt. Add points for
  total score

13
Distribution and Collection of RFI/RFP

• How are you going to distribute the questions?
  Email or regular mail
• Who are you inviting to respond?

• Current lenders on your list
• Send an email to all lenders in your state
  association or post on association website for
  all lenders to view
• Only lenders who have contacted you about being
  on or added to your list

14
Distribution and Collection

• How long are going to allow for a response?
• 1. Provide adequate time for best results
• 2. Know up front if you will grant extensions
• How can the lenders ask questions
• Who is the point of contact for the lenders
• How do you want the results sent to you email,
  regular mail, do you want a particular number of
  copies?

15
Financial Comparisons

• Requesting Financial Information

• Provides objective comparison
• Use amounts relevant to your population
• Be careful what you ask for!

16
Financial Comparisons

• School Requests Cost of 19,000
  Stafford Loan 
•  

17
Financial Comparisons
18
Financial Comparisons

• ACH benefits usually do not change the payment
  amount.
• ACH benefits are subject to borrowers actions,
  therefore re-amortization of payment amounts do
  not usually happen.
• The interest rate changes while enrolled in ACH,
  and less interest is accrued during this time,
  paying the loan off sooner than initially
  scheduled.

19
Financial Assumptions

• Be precise and consistent with assumptions
  provided.
• Request the lender to follow your model
• loan amounts - 3500, 4500, 5500, 5500
• types unsubsidized, PLUS, GRAD PLUS, ALT
• interest rates 6.8, 8.5 best worst case
• number of loans 1 per year for 4 years
• disbursement dates - 8/15 1/15
• graduation date - 5/15/2012
• borrower interest payment selection none
  (capitalizes)
• repay behavior ACH, all on-time, utilize all
  benefits

20
Financial Comparisons
21
Financial Comparisons
22
Financial Comparisons
23
Financial Comparisons
24
Financial Comparisons

• 19,000 Loan has 3 different costs
• 19,000 lump sum cost 7,238.00
• 19,000 annualized w/ 8/15 1/1 cost
  11,399.60
• 19,000 annualized w/ 9/1 1/15 cost
  11,286.80
• Choosing different disbursement dates saves
  112.80

25
Lenders Questions Asked

• Who will be completing the RFI for the lender
• Centralized business unit
• Sales Representative
• When is the deadline is it obtainable??
• Lenders often receive many RFI all at once
• Many with similar due dates
• Who can be contacted for additional questions
• Did the school provide a primary contact
• Did they provide a preferred contact method

26
Lenders

• Who will be involved in the process
• Sales, Marketing, Operations, Compliance, Legal
• Are outside sources needed to complete the
  request
• Guarantors
• Servicers
• Business Partners
• Items that may require additional time
• Customized Reporting
• Specific Approval Rates

27
Lenders

• When reading a response if something is unclear
  please ask for clarification
• Some information is considered to be proprietary
  information and can not be given in RFI/RFP
  Reponses.
• Lenders may ask for extensions based on
• Product changes
• Waiting for information from 3rd parties
• Staff is on vacation, out sick, etc.

28
Evaluation and Decision

• Make sure your committee is properly trained
• Describe in detail the scoring method you have
  established
• Are you going to review the information as a
  group or individual committee members review alone

29
Evaluation and Decision

• Who will make the final decision? Will you need
  approval of supervisors or president?
• Is your process cut and dry so the scoring can
  make the decision for you?
• Who will notify the lenders of the decisions?
• a. Be prepared with an explanation of why a
  lender is
• not going to be included on your lender
  list

30
Hints and Pitfalls

• Ask only the questions you want to review and
  score
• Provide lenders adequate time to respond to your
  RFI/RFP
• Train your committee on terminology and scoring
• Be prepared for more information than you
  requested

31
Hints and Pitfalls

• Do not expect the process to be done in a few
  weeks
• Confer with your supervisors, deans,
  vice-presidents, presidents and legal
• Remember to keep tally sheets and results just in
  case
• Smile ? it is really not that bad of a process

32
Closing

• Questions / Comments

33
The following is a presentation prepared for
PASFAAs 2008 Fall Conference in State College,
PA October 12-15, 2008
34
(No Transcript)