National Direct Student Loan Coalition Presents

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National Direct Student Loan CoalitionPresents

• Choosing the Direct Loan Option
• The Federal Student Loan Delivery System
• Whose Time Has Come
• National Webinar, August 1, 2007

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• Introduction
• -Roberta Johnson, Chair NDSLC and Director of
  Financial Aid at Iowa State University
• Presentation
• -Craig Munier, Past Chair NDSLC and Director of
  Financial Aid at University of Nebraska Lincoln
• With special thanks to our Webinar Host, AACRAO

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Agenda

• What is Direct Lending?
• Historical perspective
• Why DL? Why now?
• What must a school do to move to Direct Lending?

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What Is Direct Lending?

• Created by Congress in 1992 as a replacement for
  the Federal Family Education Loan Program (FFELP)
• Legislative Goals
• Simple, one-stop-shopping for students aid
• Significant taxpayer savings
• Streamlined processing at schools

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Historical Perspective

• 93-94 104 Schools enter DL for Year 1
• 95-96 1,263 Schools are DL schools33 of total
  student loan volume
• Student Loan Reform Act of 1993 Congress decides
  to keep 2 loan programs based on industry
  lobbying
• DL is the largest single source of federal
  student loans in the nation

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DL is the Better Choice

• For Students
• For Taxpayers
• For Schools

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Better for Students

• DL has the same statutory benefits as FFELP
• Loans never sold one source to borrow and repay
• In last 4 years, FFELP loans sold on average 2.5
  times!
• Cohort default rate is 20 lower in DL
• .25 interest reduction with EFT
• Income Contingent Repayment available in DL
  Consolidation, not in FFELP

• No strings attached, illusory benefits as in
  FFELP that require 24 to 48 months on time
  payments (where less than 1 qualify)
• DL fee reduction only requires 12 on time
  payments to retain
• Interest is capitalized less frequently in DL
  than is the normal practice in FFELP
• Late fees are less punitive than the maximums
  allowable and assessed in FFELP

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Better for Schools

• Simple
• Easy
• Less costly to administer with fewer staff
  needed, reducing pressure on tuition increases
• Better customer service
• Easy to make changes to loans after origination
• Processing Pell with a Promissory Note

• No profit motive for middlemen means DL is
  inherently not subject to unethical and/or
  illegal activities between FFELP profit centers
  and school administrators

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Better for Taxpayers

• The Research
• GAO (Government Accountability Office)
• CBO (Congressional Budget Office)
• OMB (Office of Management and Budget)
• Presidential Budgets every year since DLs
  inception
• US Pirg
• NBER (National Bureau of Economic Research)
• Heritage Foundation

• The Results
• DL is cheaper than FFELP - 10 for every 100
  loaned
• Cohort Default Rate in DL is 20 lower than in
  FFELP
• DL is ethical program not prone to illegal or
  questionable behaviors by lenders and/or school
  personnel

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Moving to DL

• Full Directions at
• http//www.ed.gov/offices/OSFAP/DirectLoan/index.h
  tml

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Step One

• Get federal approval to participate
• If you already participate in PELL, you are
  nearly done with the federal application
• Change Program Participation Agreement (PPA)
• Check if DL is already on your schools
  Eligibility and Certification Approval Report
  (ECAR) - PPA
• If not, go to E-APP for Schools Web site
  www.eligcert.ed.gov
• Add DL as a program in which you wish to
  participate

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Step Two

• Once your PPA is adjusted to include DL and your
  request is approved
• E-mail participation request to
• CODSupport_at_acs-inc.com
• Include
• School name, address,
• and phone Requestors name,
• e-mail, and phone
• Award Year COD ID (8 digit )
• DUNS OPE ID (8 digit )
• ED sends school its approval after review

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Step Three

• Decide how your school will process Direct Loans
• 1. Use EDExpress, free software provided by the
  Department. If you choose to use EDExpress
  software, you can download the most recent
  version of the software and related
  documentation. Questions contact Central
  Processing System (CPS) Technical Support at
  [phone]. (Training is available from the
  Department on this software at regional offices,
  at conferences, and on web.)
• 2. Use Banner, Peoplesoft, or other mainframe
  vendors system for processing DL
• 3. Develop your own Direct Loan software using
  the technical specifications found in the COD
  Technical Reference available on
  www.fsadownload.ed.gov OR
• 4. Use a Third Party Servicer.

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Step Four

• Update your SAIG agreement to include DL
  processing
• contact the SAIG customer service staff at (800)
  330-5947
• or visit their website at https//www.fsawebenroll
  .ed.gov/PMEnroll/index.jsp

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Step Five

• Set up your school to receive Direct Loan funds
  via the Department's Grant Administration and
  Payment System (GAPS)
• Bank account information must be in GAPS. Visit
  the GAPS website or call the GAPS Hotline at
  [phone] for instructions.
• You must submit a new direct deposit form, Form
  SF1199A (available at your bank), to receive
  Direct Loan funds even if you will use the same
  bank account as your other Title IV funds.
• If you already have a valid GAPS user ID and
  password, you do NOT need to request a separate
  one for Direct Loans.

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Step Six

• Contact COD School Relations at [phone] or
  codsupport_at_acs-inc.com to reach your primary
  Customer Service Representative (CSR).
• Add Direct Loan contact information
• Sign up to receive Direct Loan bulletins via
  e-mail
• Select your Direct Loan report options
• Establish your promissory note process (paper or
  electronic)
• COD Training at http//www.ifap.ed.gov/eannouncem
  ents/1007CODUpdatedCBTDoc.html

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Step Seven

• Sign up to receive Direct Loan listserv messages.
• To join, send an e-mail request to David Hebrank
  (david.hebrank_at_ed.gov) on the Direct Loan
  Operations team. The request should include your
  name and school, complete e-mail address, and a
  request to be added to the listserv.

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Step Eight

• Help from other DL Schools
• Direct Loan school contacts

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School Platform Contact Person Phone Type
Iowa State University Homegrown Roberta L. Johnson 515-294-0109 4-year public
Stonehill College EdExpress Janice Lindstrom 508-565-1076 4-year private
University of California Berkeley Sigma's SAMS system Roberta C. Johnson 510-642-6819 4-year public
Hope College Banner Carla Bender 616-395-7765 4-year private
University of Michigan People Soft Julie Cole 734-647-3716 4-year public
Denison University Banner Nancy Hoover 740-587-6629 4-year private
Valparaiso University Datatel Phyllis Schroeder 219-464-6886 4-year private
Miami Univ. of Ohio Banner Chuck Knepfle 513-529-8555 4-year public
University of Nebraska SCT SisPlus Craig Munier 402-472-4001 4-year public
Univ. of Minnesota People Soft M.E.G. Schmidtbauer 612-624-0824 4-year public

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Other Useful Sites

• Common Origination and Disbursement
  www.cod.ed.gov
• Direct Loan Servicing www.dl.ed.gov
• Direct Loan Consolidation www.loanconsolidation.e
  d.gov
• Direct Loan Software and Reference Material
  www.fsadownload.ed.gov
• National Direct Student Loan Coalition
• www.altrue.net/site/ndslc

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National Direct Student Loan Coalition

• Choosing the Direct Loan Option
• QUESTIONS?????
• National Webinar, August 1, 2007