Federal Direct Student Loan Program at Stonehill College

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Federal Direct Student Loan Programat
Stonehill College
Eileen OLeary, Director of Student Aid and
Finance COHEAO Conference, January 29, 2007
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Some facts about Stonehill.

• 2300 Full-time undergraduates
• Stonehill began in Direct Loans in year 1
  (1994-95)
• 13.5 million loan volume 2006-2007
• One person processes all Direct Loans
• FY04 cohort default rate of 1.3

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Why did we move to DL?

• Poor service from guarantors, lenders
• Complicated, cumbersome, time-consuming process,
  especially when changes to loans were required
  most staff time spent on phone with lenders,
  servicers
• Looking for simple, one-stop-shopping alternative
  that would provide better customer service to our
  families
• Wanted more transparency and simplicity

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What have we experienced with DL?

• Reduced administrative time and expense
• Streamlined process for students and parents
• A model thats easy for families to understand
• More efficient, timely and predictable delivery
  of funds
• More efficient approval process
• Rave reviews from families

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Reasons for remaining in DL

• Customer service and administrative control
• FFELP Controlled by multiple partners
• DL Controlled by FAO one stop shopping
• Back-end servicing
• FFELP Multiple loan servicing agents loans may
  be sold several times over life of loan
• DL Single point of service for life of the loan
• Administrative issues
• Additional 150 increase staffing would be needed
  to do FFELP
• Ease, predictability and reliability of obtaining
  DL funds to assist in cash flow predictions

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Reasons for remaining in DL

• Loan Consolidation with Perkins
• FFELP results in loss of Perkins grace period
• DL does not result in loss of Perkins grace
  period
• Repayment Plan
• FFELP and DL same except income contingent
  repayment option in DL with loan forgiven after
  25 years
• DL borrowers can change repayment plans at any
  time without loss of benefits not always true in
  FFELP
• Back-end servicing
• FFELP Multiple loan servicing agents loans may
  be sold several times over life of loan
• DL Single point of service for life of the loan
• Simplicity, Simplicity, Simplicity!

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GAO Report
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(No Transcript)
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Administering Direct Lending at Stonehill College
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Information for families

• College web site is major source of information
  on Direct Lending
• All award letters are accompanied by a Financial
  Aid Guide that discusses the Direct Loan process
  for student and parent loans

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New Student Processing

• New students are awarded their Direct Loan upon
  acceptance to the College on a paper award letter
• Award letter gives recipients ability to accept
  or decline the Direct Loan
• Those who have not declined the loan are sent
  information to complete MPN and Entrance
  Counseling on line in July
• Students who want to borrow and have not
  completed the MPN and/or Entrance Counseling on
  line prior to fall attendance, are required to do
  so in person at Registration

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Returning Students

• Returning Students e-award letters indicate
  appropriate Direct Loan level
• Message on award letter indicates that student
  has a MPN on file (from ISIR NSLDS data) and
  gives instructions for completing the
  confirmation of loan amount and desire to borrow
• New borrowers are given directions to complete
  MPN/Entrance Counseling process on-line

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Students with MPN (NSLDS)

• You have previously completed a Master
  Promissory Note for your Federal Direct Student
  Loan. If you wish to decline the loan or borrow
  less than the amount for which you are eligible,
  please email finaid_at_stonehill.edu. Otherwise, we
  will assume that you wish to borrow the full
  amount indicated.

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Students with no MPN (NSLDS)

• To accept your Federal Direct Loan, you must
  first complete a student loan entrance interview
  online at www.dlservicer.ed.gov and then a Master
  Promissory Note (MPN) online at
  http//www.dlenote.ed.gov. Do not deduct the loan
  amount from your bill unless you have completed
  your entrance interview and MPN. If you wish to
  decline the loan or borrow less than the amount
  for which you are eligible, please email
  finaid_at_stonehill.edu.

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How loans are processed

• Loans are packaged and exported in batch from
  PowerFAIDS to EDExpress
• Import process originates the loan in EDExpress
• Loan origination records are exported daily via
  EdConnect to COD
• Confirmations of origination are imported via
  EdConnect daily from COD
• Confirmation of completion of MPN and Entrance
  Counseling on-line are imported in e-file from COD

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Processing continued

• Identify through queries in EdExpress, which
  students are ready to be disbursed (MPN accepted
  Entrance Counseling done) and how much can be
  disbursed
• Disburse these loans in batch in EdExpress (up to
  10 days prior to first day of classes) and export
  disbursement file to COD
• Request through Controller amount to be drawn
  down through GAPS to cover loans disbursed in
  EdExpress
• Upload award and payment information into student
  accounts

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Reconciliation

• After every drawdown reconciliation is performed
  by the loan officer
• Funds disbursed in EdExpress (and therefore at DL
  Servicer) are balanced to funds disbursed in
  student account system
• Annual reconciliation process is simple because
  we are in balance each time we draw down funds
  and disburse them to students

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PLUS Loans

• Parents request PLUS loan via web, in person,
  phone, fax, or e-mail
• Loan is originated in EDExpress
• Loan origination records are exported daily to
  COD. Credit check is performed at COD. Once the
  COD response file is imported into EdExpress (1
  to 24 hours later), MPN is either completed by
  parent on-line or paper PN is mailed to parent
  borrower by college loan officer. (Credit check
  can be done live on-line if necessary.)
• If MPN is completed on-line, COD sends a
  confirmation file which is imported into
  EdExpress
• Pending amount of PLUS loan is added to
  Powerfaids and uploaded to billing
• Disbursements handled same as for student DL

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Changes to loan amounts/types

• Changes and adjustments are made as required and
  future requests for funds are adjusted to reflect
  any cash now not in use.
• Because funds are NOT attached to individual
  students but are managed in the aggregate, funds
  drawn for one student may be used for another,
  simplifying funds management
• Reports are run frequently to insure all systems
  are balanced.

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Tips for success

• Many hands makes heavy work so limit access to
  systemeasy at small school.
• Balance aggregate funds paid to students in
  institutional system to DL Servicer disbursements
  and total drawdowns each time a drawdown is made.
• Track receipt and response files from COD
• Ask for help if needed from COD/DL Servicer

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Questions?