Session #40 A Direct Loan Primer Isiah Dupree Julie Aloisio Cynthia Battle.

Session #40

A Direct Loan Primer

Isiah DupreeJulie Aloisio

Cynthia Battle

Session OutlineBrief History of Student Aid

Direct Loan Program Overview

Direct Loan Processing Basics

School Setup

Tools & Resources

Direct Loan Servicing

Contact

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3

Student Aid History




School Setup

Tools & Resources


Contact

4

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Terms and Definitions• CPS Match and Student

Identifiers• Common Record• XML• Origination• Disbursement• Drawdowns• “Booked” Loans

• Message Classes• Reconciliation/Closeout• SAIG• EDExpress

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Roles and Responsibilities• StudentsStudents

– Apply for aid and meet eligibility requirements

– Receive and repay

• SchoolsSchools– Certify eligibility

– Deliver proceeds

– Educate borrowers about their responsibilities

– Send/receive financial and student data to/from Federal Student Aid

– Funds management and reconciliation

7

School Responsibilities• What options will best serve your students? • What offices will be involved in the process?

– What will their roles be?– Staffing levels sufficient to support operational

decisions?• Who will conduct your reconciliation?• Who will work your rejects/resolve processing

issues?

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School Responsibilities• How will you process records?

– Process yourself• Software?• Technical support?• How will you back up your data?• Production schedule?

– Third Party Servicer

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Roles and Responsibilities:Federal Student Aid

• Provides operational, system, and service support to schools & borrowers– Eligibility– Funding– Reconciliation/Closeout– Communication/Customer Service– Repayment– Loan Servicing to Borrowers

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Direct Loan Types• Subsidized

– Need-based; no interest charged while in school and during grace periods or deferment

• Unsubsidized– Not need-based; interest charged during all periods

• PLUS– Not need-based; for parents or graduate/professional

students• Consolidation

– Combines loans for easy repayment

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Master Promissory Note (MPN)

• Legal agreement• Multi-year, multi-loan notes

– Exceptions• Plain Language Disclosures• Disclosure Statements

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Subsidized and Unsubsidized Loans

• Enrollment• Eligibility• MPN• Interest• Fees/Rebate• Loan Limits

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Annual Loan Limits

YearDependent

UndergraduateIndependent

Undergraduate

1st Year $3,500 $7,500(maximum $3,500

subsidized)

2nd Year $4,500 $8,500(maximum $4,500

subsidized)

3rd Year and

above

$5,500 $10,500(maximum $5,500

subsidized)

Graduate/ Professional

Student

Up to $20,500 each academic year

(maximum $8,500 subsidized)

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PLUS Loans• Eligibility• Credit Check• Interest• Fees/Rebate• Loan limits

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PLUS Loans• MPN• Borrower Type

– Parents– Graduate/Professional students

• What is the difference between borrower types?

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Consolidation Loans• Combines multiple loans into a new single loan

with one payment

• Both students and parents are eligible to consolidate, but not together

• Similar repayment plans as other loans, but HERA changes have created some differences

• Eligibility depends on the loan types and status as well as borrower qualifications




School Setup

Tools & Resources


Contact

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Direct Loan Processing Cycle

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COD Processing• School confirms eligibility, awards,

and disburses aid• School creates student record

– Common Record or COD Web site• School sends information to COD• COD processes/edits and returns

response• Error correction, when necessary

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ISIR

COD Processing

Funding Data and Payment Requests

Central Processing System (CPS)

FAFSA

SAR

COD

Originations, Disbursements & Paper MPNs

Responses

GAPS NSLDS

DLSS

e-MPN

Funding Request

Money

Loans and Disbursements

Loans and Disbursements

Enrollment Status

Electronic Entrance & Exit Counseling

Repayment/

Servicing

Student data

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School Setup Options• Funding

– Advanced Funded vs. Pushed Cash

• Multi-year vs. Single-year

• MPN Processing

• Reports

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Master Promissory NotesAdvantages of Electronic Processing

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Master Promissory NotesMPN versus eMPN Statistics

2006 Statistics24% Paper76% eMPN







School Setup• Application and Decision

• Set-Up

Tools & Resources


Contact

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• Certified eligible for Direct Loan?

– Eligibility and Certification Approval Report (ECAR)

– “E-APP for Schools” Web site www.eligcert.ed.gov

School SetupApplication and Decision

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1. E-mail participation request to [email protected]

2. Direct Loan Operations Review

3. Decision Letter

4. PEPS transmits School Information to the COD System

School SetupApplication and Decision

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• Direct Loan ”Banking” information

• GAPS Hotline1-888-336-8930

• Web sitewww.e-grants.ed.gov

School SetupGrant Administration and Payment System (GAPS)

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• Complete or revise SAIG Agreement

– SAIG assigns mailbox (TG#s)

• Arrange for testing of transmissions

• SAIG Customer Service1-800-330-5947

• Web sitewww.fsawebenroll.ed.gov

School SetupStudent Aid Internet Gateway (SAIG)




School Setup

Tools & Resources


Contact

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COD Web sitehttp://COD.ed.gov

- Submit & Correct Records, View Batches, Retrieve Reports- Access DL Servicing Website

General Direct Loan Informationwww.ed.gov/offices/OSFAP/DirectLoan/index.html

General Federal Student Aid Informationhttp://www.ifap.ed.gov

- DL Listserv, DL bulletin

Schools Portalhttp://fsa4schools.ed.gov

Tools & ResourcesWeb Sites

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Tools & Resources

• DL Tools–Cash Management Tools–Reconciliation–Rebuild

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• Direct Loan Basics• Entrance and Exit Counseling • To order visit:

www.fsapubs.org

Tools & ResourcesBorrower Publications

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• COD Technical Reference– Implementation Guide

• Direct Loan School Guide• Blue Book• Financial Aid Handbook• NSLDS Enrollment Reporting Guide

Tools & ResourcesSchool Publications

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Direct Loan Information• Regulatory Cites: Code of Federal Regulations 34

– Part 668 provides the general provisions for all the Title IV programs

– Part 685 is specific to the Direct Loan Program• FSA Handbook References

– Origination: Volume 4, Chapter 1– MPNs: Volume 4, Chapter 1– Disbursements: Volume 4, Chapter 2– Cash Management: Volume 4, Chapter 3




School Setup

Tools & Resources


Contact

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Account LookupView live account data for students including balances, account status, separation dates, and more.

Reporting ToolsExit & Entrance Counseling Reports

Identify students who have completed Counseling OnlineDelinquency Reports

Detail, Summary, Late Stage Delinquency, and Borrower History

Email SubscriptionReceive email notifications when reports are available online

DL Servicing ResourcesWeb Site HelpGeneral InformationContact Us

Spanish Version

Login to Servicing is through COD

http://www.dl.ed.gov/schools School Services Online

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Direct Loan Servicing School Site School Services Online

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Click here to see Repayment Estimates

School Services OnlineStudent Account Lookup

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Summary Delinquency Report

Late Stage Delinquency Report

School Services OnlineDelinquency Reports

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Stafford Borrower Delinquency Pattern 12 Month Average

0%

5%

10%

15%

20%

25%

30%

35%

31-60 61-90 91-120 121-150 151-180 181-210 211-240 241-270 271-300 301-330 331-360

Days Past Due

Per

cent

age

of T

otal

Del

inqu

ency

School Services OnlineBorrower Delinquency Pattern

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• Pre-Repayment Counseling– Default Propensity Index (DPI) score– We use both Outbound and Inbound calls for

counseling

• 83% of all Default borrowers were not successfully contacted by phone during the 360-day collection effort during delinquency

• Delinquency Counseling– 31 days we begin a series of calls (22 calls)

• High Balance and current cohort year (44 calls) – Letters begin at 7 days delinquent (12)

School Services Online

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• FAFSA • Promissory notes• Entrance Counseling

& Exit Counseling• Repayment

Servicing • Loan Consolidation

Universal single PIN access to all sites

The Direct Loan Program offers online services to borrowers from start to finish.

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http://www.studentaid.ed.gov

Benefits to Borrowers

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• Repayment incentives• Repayment options tailored to individual need (Standard,

Extended, Graduated, Income Contingent, Alternative Repayment)

• Payment due date selection by borrower• Options for receiving bills and/or correspondence

electronically • Electronic Payments (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)• Loan Consolidation

The Direct Loan Program offers borrowers flexibility.Benefits to Borrowers

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Your AccountView live account data and manage loans online

Question CenterOnline information

resource for borrowers

Download FormsDownload loan-related forms directly, avoiding the time and expense of mailing

Provides over 6 million student borrowers with highly secure on-line services for:http://www.dl.ed.gov

Spanish/English Options Entire site available in Spanish

Loan Consolidation Consolidate existing loans into a single Direct Loan

Online Billing & Payment Receive bills and correspondence electronically, make payments online

Borrower Services Online

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Exit Counseling

Click here to view your Non-Direct Loans

Borrowers are provided with the amount of

their total indebtedness

(Direct Loans, FFEL, and

Perkins) during Exit Counseling

or from the Account

Summary page.

Borrower Services OnlineAccount Information

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Borrowers may select one of our four repayment plans:

•Standard•Extended•Graduated•Income Contingent Repayment (ICR)

Borrowers may also select from any of the four available due dates: 7th, 14th, 21st, or 28th

Borrower Services OnlineRepayment Options

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Direct Loan borrowers can receive their bills and make payments online; and they can choose to receive their Direct

Loan correspondence electronically, all for free.

381,227 online payments were made during the month of July

for a grand total of $96,065,817.69.

Borrower Services OnlineBills and Payments

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Borrower feedback:

I just wanted to congratulate you on providing an excellent way to manage my student loan account. I cannot tell you how much simpler it is for me, knowing I can do everything I need on-line. I don't have to mail anything or call someone -- I just need to log in.

- Troy

958,200 borrowers are receiving a .25%

incentive by enrolling in EDA!

Borrower Services OnlineElectronic Debit Account

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Borrowers can submit Unemployment Deferment and General Forbearance

applications online.

Borrower Services OnlineOnline Form Submission

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Borrower Services OnlineEntrance Counseling

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Borrower Services OnlineExit Counseling

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Call Center Resources for Schools

COD School Relations Centerhttp://www.cod.ed.gov(800) 848-0978

School Services – Direct Loan Servicing

http://www.dl.ed.gov/schools (888) 877-7658

Direct Loan Consolidation Centerhttp://www.loanconsolidation.ed.gov(800) 557-7392

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General Federal Student Aid Informationhttp://www.studentaid.ed.gov (800) 433-7327

COD School Relations-Applicant Services(800) 557-

7394Direct Loan Servicing Center – Borrower Services

http://www.dl.ed.gov (800)848-0979 Direct Loan Consolidation Center

http://www.loanconsolidation.ed.gov (800) 557-7392Federal Student Aid Ombudsman

http://www.ombudsman.ed.gov (877) 557-2575

Direct Loan Informationhttp://www.ed.gov/offices/OSFAP/DirectLoan/index.html

Call Center Resources for Borrowers

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Related Direct Loan Sessions

Session #4Title IV Funding to Schools: From COD to GAPS

Session #24 COD Web Hands On

Session #41Unlocking the Potential of Direct Loan Reports

Session #42 What’s New in Direct Loans for 2008-2009

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Questions or Comments?We appreciate your feedback and comments.

Direct Loan Operations Team can be reached via e-mail at:

[email protected]

Contact Information

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Isiah DupreeSupervisor, Direct Loan [email protected] (202) 377-3137

Julie AloisioManagement/Program Analyst, Direct Loan Operations [email protected](202) 377-3149

Cynthia BattleDirect Loan Servicing (Non-Default Group), [email protected](202) 377-3261

Session #40 A Direct Loan Primer Isiah Dupree Julie Aloisio Cynthia Battle.

Documents

Transcript of Session #40 A Direct Loan Primer Isiah Dupree Julie Aloisio Cynthia Battle.