Direct Loan Servicing Working with Schools

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Direct Loan Servicing - Working with Schools

• Federal Student Aid Presenters
• Sue Szabo
• Cynthia Battle

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Agenda

• Direct Loan Servicing
• Facts and Figures
• Direct Loan Servicing Borrower Services
• Direct Loan Servicing School Services
• School Reports
• Delinquency Default Prevention
• Direct Loan Transition - School Support
• Servicing Tomorrow
• A Changing Landscape in FSA
• Loan Participation and Purchase
• 100 Direct Lending
• Additional Servicers

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Portfolio Statistics William D Ford Direct Loan
Program (Direct Loans)
Total Direct Loan Borrowers
7.8 Million Active Borrowers
Number Includes delinquent borrowers Statistics
as of July 2009 month end.
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Direct Loan Servicing Web Sites

• For Borrowers - www.dl.ed.gov
• Real Time Account Information
• Online Transaction Processing - Borrower
  Self-Service
• Online Counseling and Rules Based Messaging
• Interactive Pre-qualifier for Deferment and
  Forbearance Requests including online submission
  with eSignatures
• Online payments
• Electronic Mail Services
• EDA Enrollment
• Online Calculators
• Online Surveys
• For Schools - www.dl.ed.gov/schools
• Student Account Lookup
• Online Reports Portfolio, Delinquency and
  Counseling
• Complete Question Center

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Direct Loan ServicingBorrower Repayment Tools

• Repayment incentive
• Repayment options tailored to individual need
• Standard, Extended, Graduated, Income Contingent,
  Income-Based Repayment, Alternative Repayment
• Public Service Forgiveness Program
• Payment due date selection by borrower
• Options for receiving bills and/or correspondence
  electronically
• Flexible Payment options (EDA and on-line)
• Self-Service tools for borrowers
• (telephone voice response system, Web portals)
• Online form submission with electronic PIN
  signatures (forbearance, deferments, EDA, FAFSA)

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Direct Loan ServicingSchool Reports

• What types of Reports
• Entrance counseling
• Exit counseling
• Delinquency
• Portfolio
• When
• as needed daily, weekly, monthly
• Where
• SAIG mailbox, email, DL servicing website
• Why
• to monitor borrower activity at DL servicing

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School Web SiteHomepage dl.ed.gov/schools
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School Web SiteWelcome Page
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School Web SiteStudent Account Lookup
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School Web SiteReports

• School Reports Entrance Counseling
• Plus Entrance Counseling By Date
• The Entrance Counseling by Date report enables
  Financial Aid Officers / other authorized school
  staff to search within a given date range and
  view a listing of students that have completed
  Online Entrance Counseling while attending their
  institution.
• Stafford Entrance Counseling By Date
• The Entrance Counseling by Date report enables
  Financial Aid Officers / other authorized school
  staff to search within a given date range and
  view a listing of students that have completed
  Online Entrance Counseling while attending their
  institution.
• Plus Entrance Counseling By SSN
• The Entrance Counseling by SSN report enables
  Financial Aid Officers or other authorized school
  staff to search by SSN and determine whether a
  given borrower has completed Online Entrance
  Counseling.
• Stafford Entrance Counseling By SSN
• The Entrance Counseling by SSN report enables
  Financial Aid Officers or other authorized school
  staff to search by SSN and determine whether a
  given borrower has completed Online Entrance
  Counseling.

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School Web SiteReports

• School Reports Exit Counseling
• Detailed Exit Counseling by Date
• The Detailed Exit Counseling by Date report
  enables Financial Aid Officers or other
  authorized school staff to search within a given
  date range and view details of students that have
  completed Online Exit Counseling while attending
  their institution.
• Exit Counseling by SSN
• The Exit Counseling by SSN report enables
  Financial Aid Officers or other authorized school
  staff to search by SSN and determine whether a
  given borrower has completed Online Exit
  Counseling.
• Exit Counseling by Date
• The Exit Counseling by Date report enables
  Financial Aid Officers or other authorized school
  staff to search within a given date range and
  view a listing of students that have completed
  Online Exit Counseling while attending their
  institution.

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School Web SiteReports

• School Reports Portfolio
• Borrowers by Payment Method
• The Borrowers by Payment Method Report displays a
  count of the number of Stafford and PLUS
  borrowers repaying their loans by each available
  payment method. It further displays a loan count,
  broken down by loan status, for each borrower
  type.
• Institution Separation Report
• The Institution Separation Report enables
  Financial Aid Officers or authorized school staff
  to search within a given date range and view a
  listing of students who have separated or will be
  separating from their institution.
• Borrowers by Repayment Plan
• The Borrowers by Repayment Plan Report displays a
  count of the number of Stafford and PLUS
  borrowers repaying their loans by each available
  repayment plan. It further displays a loan count,
  broken down by loan status, for each borrower
  type.
• My Portfolio
• The My Portfolio Report displays a school's total
  Original Loan Amount (OLA) and Principal Balance
  Outstanding (PBO) for Stafford and PLUS
  borrowers. It displays both a borrower and loan
  count, broken down by loan status, for each
  borrower type.

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School Web SiteReports

• School Reports Delinquency
• Borrower Contact Detail Report
• The Borrower Contact Report expands on the Detail
  Report by providing borrower demographic
  information for all stages of delinquency.  The
  use of this report feature allows your
  institution to create mail merges in order to
  deliver correspondence.
• Detail Report
• The Detail Delinquency Report contains a list of
  students that attended your institution with
  Direct Loans from the Department of Education
  that are currently in Delinquent Status.
• Summary Report
• The Summary Report provides a count of the
  Stafford and In-School Consolidation borrowers
  delinquent at the end of the month for the
  selected Reporting Period(s).
• Borrower History Report
• The Borrower History Report displays the history
  of delinquency for selected borrower(s)
• Late Stage Delinquency Assistance (LSDA) Report
• The Late Stage Delinquency Assistance(LSDA)
  report contains a list of students that attended
  your institution with Direct Loans and are
  currently 241-360 days delinquent, which can
  affect your school's cohort default rate.

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School Web SiteSubscription
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Delinquency Management and Default Prevention
Help US help YOU keep borrowers out of default!
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Delinquency Management Approach
Have a Plan
Form a Team
Partner with Servicer

• Team members should include senior school
  official , representatives from all offices and a
  student to help craft attention grabbing
  communications
• Create/adopt and implement a plan
• Meet regularly
• Evaluate progress

• Contact a School Services team member
• Utilize the online delinquency tools and reports
• Implement a Late Stage Delinquency Assistance
  (LSDA) plan

• Success is achieved when solid plans are
  developed and executed
• A plan pulls together people and resources
  toward a common goal
• Customize for your school

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What is the Direct Loan Servicer doing?

• Educates and informs borrowers as to the tools
  and options available to assist them in the
  management of their student loans
• Exceeds minimum regulatory due diligence
  requirements
• Works in partnership with the school community to
  assist borrowers in the later stages of
  delinquency

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Direct Loans Delinquency Default Prevention

• Pre-Repayment Counseling
• Calls made two months prior to entering
  repayment
• Emails sent to assist with repayment options
• Delinquency Counseling
• 31 days we begin a series of calls (22 calls)
• Letters begin at 7 days delinquent (12)
• Call Campaigns
• High balance calls (balance of 80K or greater)
• Borrowers who fall within the COHORT population
  will also receive up to 4 manual calling
  attempts.

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Direct Loans Delinquency Default Prevention

• Late Stage Delinquency Assistance (LSDA)
• involves school personnel reaching out to
• seriously delinquent borrowers (240 days),
• and facilitating the critical contact with the
• loan servicer to prevent loan default.
• Direct Loan School Services
• [phone]

Remember We work together to combat delinquency.
We have developed an LSDA guide and online tools
for schools to assist in delinquency efforts.
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School Web SiteDelinquency Reports
Summary Delinquency Report
Late Stage Delinquency Report
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Literacy Materials
Learn the Basics and Manage Your Debt
On-line ordering at http//edpubs.ed.gov
Order by phone at 1-877-4ED-PUBS
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Direct Loan School Services

• 1-888-877-7658 (School Services)
• www.dl.ed.gov/schools
• 30-day Demand Letters
• Cohort Default Assistance
• Delinquency Management Assistance
• Exit Counseling Interview Materials
• NSLDS/Clearinghouse
• SSCR/Student Enrollment
• Account Status
• Web Assistance

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Agenda

• Direct Loan Servicing
• Facts and Figures
• Direct Loan Servicing Borrower Services
• Direct Loan Servicing School Services
• School Reports
• Delinquency Default Prevention
• Direct Loan Transition - School Support
• Servicing Tomorrow
• A Changing Landscape in FSA
• Loan Participation and Purchase
• 100 Direct Lending
• Additional Servicers

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FSA Support for Schools Direct Loan Transition

• FSA has developed structure to
• Respond quickly to community needs
• Ensure smooth transition
• DL Transition Team
• Multiple sub teams

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FSA Support for Schools Direct Loan Transition

• DL Transition team and sub teams will manage
• Planning of communications
• Training plans
• System Capacity development
• Publication updates
• Targeted Outreach
• School Set up requirements and options

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Agenda

• Direct Loan Servicing
• Facts and Figures
• Direct Loan Servicing Borrower Services
• Direct Loan Servicing School Services
• School Reports
• Delinquency Default Prevention
• Direct Loan Transition - School Support
• Servicing Tomorrow
• A Changing Landscape in FSA
• Loan Participation and Purchase
• 100 Direct Lending
• Additional Servicers

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A Changing Landscape

• Ensuring Continued Access to Student Loans Act
  (ECASLA)
• Provided Secretary with authority to purchase
  FFELP loans
• Loan Participation Program
• Loan Purchase Program (PUT)
• Conduit

• Current Volumes (as of 8/30/09)
• 18.7 Billion (purchase)
• Approx. 2.6 Million Borrowers (purchase)

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A Changing Landscape

• What is being proposed?
• 100 Direct Lending
• A Modernized and Expanded Perkins Program
  Originated and Serviced through the Department

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Additional Servicers

• To ensure that the Department of Education could
  handle volumes of loans sold to the government
  and any additional Direct Loan volumes, the
  Department has entered into agreements with four
  additional servicers.
• These agreements are for servicing only.
  Origination and disbursement of all Direct Loans
  will be through the Common Origination and
  Disbursement System (COD).

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Planning for Additional Servicers

• Created an environment of competition to ensure
  student borrowers received best in business
  service.
• Selected Additional Federal Loan Servicers
• ACS (current servicer)
• Great Lakes Education Loan Services (additional)
• Nelnet (additional)
• Sallie Mae Corporation (additional)
• AES / PHEAA (additional)

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Measuring Performance

• Performance Measurements
• Service Levels
• Borrowers
• Schools
• Department of Education
• Borrower Defaults
• On going program compliance reviews

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Approach

• Examples of Services
• Single Point of Contact for Schools per Servicer
• Financial literacy materials and web tools
• Predictive call modeling
• (for delinquency)
• Robust skip tracing tools (for delinquency)
• Web Chat

• All borrower federally held loans will be
  maintained by a single servicer
• Servicers must comply with all legislative and
  regulatory requirements and will provide unique
  best in business services.
• Schools will be working with multiple servicers

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What does all this mean for schools?

• Will schools have to work with multiple
  servicers?
• Can a school designate which servicer they want
  to service their loan portfolio?
• How will a school know which servicer has their
  borrowers loans?
• Will schools have a venue for providing feedback
  on the performance of the servicers?

• Yes, schools will work with more than one loan
  servicer and will likely interface with all loan
  servicers.
• No, schools cannot designate which servicer to
  service their borrowers.
• Schools will use NSLDS to determine which
  servicer has borrower loans.
• Yes, schools will have input regarding a
  servicers performance via customer satisfaction
  surveys.

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How will the servicers appear in NSLDS?
DEPT of ED/ ACS
DEPT of ED/ Sallie Mae
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How will the servicers appear in NSLDS?
DEPT of ED/ FEDLoan Servicing (PHEAA)
DEPT of ED/ NELNET
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How will the servicers appear in NSLDS?
DEPT of ED/ Great Lakes
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Implementation Timeline

• Three-Phase Implementation
• Phase 1 (Initial) COMPLETE
• Phase 2 (Intermediate) 3/31/10 Completion Date
• Phase 3 (Final) 8/31/10 Completion

• Timeline
• August 31, 2009 (Phase 1) - COMPLETE
• Additional Servicers fully operational to
  handle loan sales for Department
• January 15, 2010
• Performance evaluation conducted
• March 15, 2010
• First Compliance review performed
• March 31, 2010 (Phase 2)
• July 15, 2010
• Allocations of new borrower loan volume will
  be determined (per servicer)
• August 31, 2010 (Phase 3)
• Additional Servicers fully operational to
  handle William D Ford Direct Loans

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Contact Information
Questions or Comments ? Thank You!
Susan Szabo Federal Student Aid
Phone [phone] Email susan.szabo_at_ed.gov
Cynthia Battle Federal Student Aid Phone
202-377-3261 Email cynthia.battle_at_ed.gov