Session #40

A Direct Loan Primer Isiah Dupree Julie Aloisio Cynthia Battle

Session Outline
Brief History of Student Aid Direct Loan Program Overview Direct Loan Processing Basics School Setup Tools & Resources Direct Loan Servicing Contact

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Student Aid History

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Session Outline
Brief History of Student Aid Direct Loan Program Overview Direct Loan Processing Basics School Setup Tools & Resources Direct Loan Servicing Contact

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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
• Students
– Apply for aid and meet eligibility requirements – Receive and repay

• Schools
– Certify eligibility – Deliver proceeds – Educate borrowers about their responsibilities – Send/receive financial and student data to/from Federal Student Aid – Funds management and reconciliation

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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
Year 1st Year Dependent Undergraduate Independent Undergraduate $7,500 (maximum $3,500 subsidized) $8,500 (maximum $4,500 subsidized) $10,500 (maximum $5,500 subsidized) Graduate/ Professional Student Up to $20,500 each academic year (maximum $8,500 subsidized)

$3,500 $4,500

2nd Year

3rd Year and above

$5,500

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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

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Session Outline
Brief History of Student Aid Direct Loan Program Overview Direct Loan Processing Basics School Setup Tools & Resources Direct Loan Servicing 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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COD Processing
ISIR Central Processing System (CPS) FAFSA SAR

e-MP

N

Electronic Repayment/ Entrance & Exit Servicing Counseling

Originations, Disbursements & Paper MPNs Responses

COD
Funding Data and Payment Requests

Loans and Disbursements

DLSS
Loans and Disbursements Enrollment Status

Funding Request Money

GAPS

e Stud

ta nt da

NSLDS

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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 Notes

Advantages of Electronic Processing

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Master Promissory Notes
MPN versus eMPN Statistics
2006 Statistics 24% Paper 76% eMPN 2007 Statistics 19% Paper 81% eMPN

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Session Outline
Brief History of Student Aid Direct Loan Program Overview Direct Loan Processing Basics School Setup
• Application and Decision • Set-Up

Tools & Resources Direct Loan Servicing Contact
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School Setup

Application and Decision • Certified eligible for Direct Loan? –Eligibility and Certification Approval Report (ECAR) –“E-APP for Schools” Web site www.eligcert.ed.gov

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School Setup

Application and Decision
1. E-mail participation request to CODSupport@acs-inc.com 2. Direct Loan Operations Review 3. Decision Letter 4. PEPS transmits School Information to the COD System

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School Setup

Grant Administration and Payment System (GAPS)

• Direct Loan ”Banking” information • GAPS Hotline 1-888-336-8930 • Web site www.e-grants.ed.gov

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School Setup

Student Aid Internet Gateway (SAIG)
• Complete or revise SAIG Agreement – SAIG assigns mailbox (TG#s) • Arrange for testing of transmissions • SAIG Customer Service 1-800-330-5947 • Web site www.fsawebenroll.ed.gov

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Session Outline
Brief History of Student Aid Direct Loan Program Overview Direct Loan Processing Basics School Setup Tools & Resources Direct Loan Servicing Contact

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Tools & Resources
Web Sites
COD Web site http://COD.ed.gov - Submit & Correct Records, View Batches, Retrieve Reports - Access DL Servicing Website General Direct Loan Information www.ed.gov/offices/OSFAP/DirectLoan/index.html General Federal Student Aid Information http://www.ifap.ed.gov - DL Listserv, DL bulletin Schools Portal http://fsa4schools.ed.gov

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Tools & Resources
• DL Tools –Cash Management Tools –Reconciliation –Rebuild

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Tools & Resources
Borrower Publications

• Direct Loan Basics • Entrance and Exit Counseling • To order visit: www.fsapubs.org

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Tools & Resources
School Publications • COD Technical Reference –Implementation Guide • Direct Loan School Guide • Blue Book • Financial Aid Handbook • NSLDS Enrollment Reporting Guide

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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

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Session Outline
Brief History of Student Aid Direct Loan Program Overview Direct Loan Processing Basics School Setup Tools & Resources Direct Loan Servicing Contact

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School Services Online
Account Lookup
View live account data  for students including  balances, account  status, separation dates,  and more.

http://www.dl.ed.gov/schools
DL Servicing Resources
Web Site Help General Information Contact Us 

Reporting Tools

Exit & Entrance Counseling  Reports Delinquency Reports

Identify students who have        completed Counseling Online Detail, Summary, Late Stage  Delinquency, and Borrower  History   Receive email notifications    when reports are available   online

Spanish  Version
Login to Servicing  is through COD

Email Subscription

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School Services Online
Direct Loan Servicing School Site

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School Services Online
Student Account Lookup

Click here to see Repayment Estimates

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School Services Online
Delinquency Reports
Summary  Delinquency Report Late Stage  Delinquency Report

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School Services Online
35%

Borrower Delinquency Pattern
12 Month Average

Stafford Borrower Delinquency Pattern

30%

Percentage of Total Delinquency

25%

20%

15%

10%

5%

0% 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

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

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Benefits to Borrowers
           Student Portal    http://www.studentaid.ed.gov • FAFSA • Promissory notes • Entrance Counseling & Exit Counseling • Repayment Servicing • Loan Consolidation

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

Universal single PIN access to all sites

http://www.studentaid.ed.gov

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Benefits to Borrowers

The Direct Loan Program offers borrowers flexibility.
• 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

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Borrower Services Online
Provides over 6 million student borrowers with highly secure on­line services for:
Your Account Question Center
View live account data and manage loans online Online information  resource for borrowers

http://www.dl.ed.gov

Spanish/English Options
Entire site available in Spanish

Download Forms

Download loan­related forms  directly, avoiding the time and  expense of mailing

Loan Consolidation 
Consolidate existing loans  into a single Direct Loan

Online Billing &  Payment 

Receive bills and correspondence  electronically, make payments  online

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Borrower Services Online
Account Information
Borrowers are  provided with  the amount of  their total  indebtedness  (Direct Loans,  FFEL, and  Perkins) during  Exit Counseling  or from the  Account  Summary page.

Exit Counseling

Click here to view your Non-Direct Loans

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Borrower Services Online
Repayment Options
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

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Borrower Services Online
Bills and Payments
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.

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Borrower Services Online
Electronic Debit Account
958,200 borrowers are  receiving a .25%  incentive by enrolling  in EDA!

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 on­line.  I don't have to mail anything or  call someone ­­ I just need to log in. ­ Troy

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Borrower Services Online
Online Form Submission
Borrowers can submit  Unemployment Deferment  and General Forbearance  applications online.

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Borrower Services Online
Entrance Counseling

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Borrower Services Online
Exit Counseling

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Call Center Resources for Schools
COD School Relations Center http://www.cod.ed.gov(800) 848-0978 School Services – Direct Loan Servicing http://www.dl.ed.gov/schools (888) 877-7658 Direct Loan Consolidation Center http://www.loanconsolidation.ed.gov (800) 557-7392

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Call Center Resources for Borrowers
General Federal Student Aid Information http://www.studentaid.ed.gov (800) 433-7327 COD School Relations-Applicant Services (800) 557-7394 Direct Loan Servicing Center – Borrower Services http://www.dl.ed.gov (800)848-0979 Direct Loan Consolidation Center http://www.loanconsolidation.ed.gov (800) 557-7392 Federal Student Aid Ombudsman http://www.ombudsman.ed.gov (877) 557-2575 Direct Loan Information http://www.ed.gov/offices/OSFAP/DirectLoan/index.html

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Related Direct Loan Sessions
Session #4 Session #24 Session #41 Session #42 Title IV Funding to Schools: From COD to GAPS COD Web Hands On Unlocking the Potential of Direct Loan Reports 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: dlops@ed.gov

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Contact Information
Isiah Dupree
Supervisor, Direct Loan Operations isiah.dupree@ed.gov (202) 377-3137 Management/Program Analyst, Direct Loan Operations julie.aloisio@ed.gov (202) 377-3149 Direct Loan Servicing (Non-Default Group), Director cynthia.battle@ed.gov (202) 377-3261

Julie Aloisio

Cynthia Battle

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