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

• Servicing FSAs Loan Portfolios
• Direct Loan Facts and Figures
• Direct Loan Servicing Delinquency Default
  Prevention
• Support for Schools Direct Loan Transition
• Servicing Tomorrow
• A Changing Landscape in FSA
• Loan Participation and Purchase
• 100 Direct Lending
• Additional Servicers

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Portfolio Statistics
Total Direct Loan Borrowers
7.7 Million Active Borrowers
Number Includes delinquent borrowers
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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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Borrower 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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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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Successful Strategies Include

• Promoting student success and encouraging program
  completion
• Remember Successful students tend
• to become successful borrowers!
• Encouraging limiting debt of all kinds
• Teaching financial literacy
• Obtaining current borrower contact info
• Ensuring borrower understands repayment
• Touching borrowers during the grace period
• Reaching out to borrowers who are struggling
  during repayment Use LSDA Partner with
  Servicer !

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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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School Web SiteStudent Account Lookup
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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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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

• Servicing FSAs Loan Portfolios
• Direct Loan Facts and Figures
• Direct Loan Servicing Delinquency Default
  Prevention
• Support for Schools Direct Loan Transition
• 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
• Conduit

• Current Volumes (as of 7/9/09)
• 31 Billion (participation)
• 13 Billion (purchase)
• Approx. 2 Million Borrowers (purchase)

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A Changing Landscape

• 100 Direct Loans
• A New Perkins Program
• Rehabs to Department

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Planning for Additional Servicers

• To ensure we could handle volumes of loans sold
  to government and any additional Direct Loan
  volumes
• Created an environment of competition to ensure
  student borrowers received best in business
  service.
• Selected Additional 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
• Education
• Borrower Defaults
• On going program compliance reviews

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Approach

• Examples of Services
• Single Point of Contact for Schools
• 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 service
• Servicers must comply with all legislative and
  regulatory requirements and will provide unique
  best in business services.

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Implementation Timeline

• Three-Phase Implementation
• Phase 1 (Initial) 8/31/09 Completion Date
• Phase 2 (Intermediate) 3/31/10 Completion Date
• Phase 3 (Final) 8/31/10 Completion

• Timeline
• August 31, 2009 (Phase 1)
• 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 Loan

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Emergency Preparation

• Federal Student Aid is committed to helping FAAs
  and schools impacted by a disaster.
• Preparation is the Key!
• Update your existing officials in Section A of
  the E-App and provide ALTERNATE contact
  information in Section K, Question 69.
• Staff are in the Resource Room (007AB) to assist
  you with updating your contact information.
  Please come see us!

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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