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Sue O’Flaherty| Nov. 2012 U.S. Department of Education 2012 Fall Conference Federal Loan Servicer Panel Discussion Session1 4
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Sue O’Flaherty| Nov. 2012
U.S. Department of Education
2012 Fall Conference
Federal Loan Servicer Panel Discussion
Session14
•Servicing Background
•Overview of Loan Lifecycle including Frequently Asked Questions
– On-boarding– In-School– Grace– Repayment– Delinquent Repayment
•Questions for our Servicers
Department of Education Loan Services
Session Format
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“TIVAS”
Title IV Additional Servicers
“TIVAS” An acronym used by FSA which stands for the Title IV Additional Servicers. In communications with schools, borrowers, and the financial aid community, FSA uses the term “federal loan servicers.”
Federal Loan Servicers
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Meet the Panel Members
Panel Representative: Servicer :
Dan Weigle
Brett Lindquist
Jim Harris
Bob Leary
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• Comply with legislative regulatory requirements and provide unique services
• Educate and inform borrowers regarding the tools and options available to assist them in the management of their student loans
• Offer multiple repayment options tailored to borrower preferences (i.e. online payments, ACH, check, etc.)
• Provide self-service tools for borrowers and options to receive bills and/or correspondence electronically
• Offer dedicated services to schools to help manage cohort default rates
Our Federal Loan Servicers:
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Federal Loan Servicers - TIVAS
COD LDE • Origination• Disbursement • Loan Allocation• Servicer Assignment • Customer Service
COD
SSEERRVVIICCIINNGG
LDE : Loan Distribution Engine: interface to assign loans to the federal loan servicers.
“Booked” Loan: occurs when the COD system accepts an origination record; links p-note to the record and accepts actual disbursement.
The federal loan servicer is assigned upon “booking” of loan.
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Not-For-Profit Servicers
“Not-For-Profit awarded federal loan servicing contracts under the HCERA/SAFRA Not-For-Profit (NFP) Servicer Program solicitation.
Federal Loan Servicers
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Federal loan servicing contracts awarded under the HCERA/SAFRA Not-For-Profit (NFP) Servicer Program solicitation
We continue to expand our federal loan servicer team as our loan portfolio grows
Whether individual or team award, our customers will know and face one servicer
Not-For-Profit Servicers
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NFP Servicer NSLDS Name NSLDS Code
Aspire Resources Inc. DEPT OF ED/ASPIRE RESOURCES INC.-ISL 503
CornerStone DEPT OF ED/CORNERSTONE-UHEAA 502
EdManage DEPT OF ED/EDMANAGE 505
ESA/Edfinancial DEPT OF ED/ESA-EDFINANCIAL 501
Granite State – GSMR DEPT OF ED/GRANITE STATE-GSMR-NH 504
KSA Servicing (Kentucky) DEPT OF ED/KSA SERVICING 508
MOHELA DEPT OF ED/MOHELA 500
OSLA Servicing DEPT OF ED/OSLA SERVICING 506
VSAC Federal Loans DEPT OF ED/VSAC SERVICING 511
There are seven more NFP’s tentatively scheduled to go live in 2013.
The solicitation is open until 12/2013 so there is a potential for more NFP’s to be added.
Not-For-Profit Servicers
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Challenges and Benefits• The federal loan servicers and FSA collaborate on solutions
to borrower, school, regulatory and operational issues
• Through the multi-servicer, borrower-centric approach, schools will notice different processes and procedures offered by the servicers
• The competitive structure of the servicing contracts allows for more innovation and creativity
• More similarities than significant differences
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Measuring Performance
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Allocation Methodology
• Allocations are based on rankings • Survey results • Repayment statistics• Most points for first place• One point for last place• Percent of new loans = percent of points
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•Servicing Background
•Overview of Loan Lifecycle– On-boarding– In-School– Grace– Repayment– Delinquent Repayment
•Questions for our Servicers
Department of Education Loan Services
Session Format
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Loan Lifecycle From a servicing perspective there are various stages that
make up a borrowers “loan lifecycle” in which specific activities and questions arise
Although the stages are student/borrower lifecycle stages, we know that schools have a significant role in each of these lifecycle stages
Specific activities are completed in each of the lifecycle stages and student borrowers contact their Financial Aid Administrators with questions throughout the stages
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Servicer Role - Loan Lifecycle
Establish CustomerRelationshipContact informationOnline acct set-upTools available“We’re here to help”
Maintain ContactObligation remindersFinancial LiteracyNSLDS Update/exchangeAnswer questions“We’re here to help”
Prepare for SuccessfulTransition to RepaymentEarly interventionRepayment optionsRepay plan modelingReminder to set up acct“We’re here to help”
Ensure SuccessfulTransition to RepaymentEarly intervention assistanceRepayment optionsPromote auto-debitRepayment tools availableBilling remindersTransaction updatesOutreach to at risk borrowersRepayment counselingSelf-service options“We’re here to help”
Focus on Healthy RepaymentPredictive modeling/segmentationReminders of repayment solutionsProactive skip-tracingIncreasing intensity of contact“We’re here to help”
Communication ChannelsUSPSEmailPhoneWebSocial mediaText
Tools AvailableFinancial LiteracySelf service optionsNumerous payment optionsRepayment plan modelingCall center agents
Services OfferedSchool default management assistanceSchool access to borrower acct infoSchool call centerSchool webinars/relevant servicing info
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On-Boarding : Things to Remember…
The federal loan servicer is assigned upon the “booking” of the loan. Booking occurs when COD accepts an origination record, links to the p-note, and accepts an actual disbursement.
COD checks to see if the borrower has a previous loan and sends the next loan to the same servicer. If it is a new borrower, the allocation scores are used to determine which servicer receives the new borrower.
New borrowers are assigned to Great Lakes, FedLoan, Nelnet, and Sallie Mae based upon percentages assigned by FSA. The percentages of new loans each servicer receives is based on its performance (default rates & customer service scores).
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When we assign a student or parent borrower’s Direct Loans to a federal loan servicer, the servicer corresponds with the borrower.
The “welcome” correspondence notifies the borrower of the servicer, toll-free phone number, and website information.
Always refer borrower to NSLDS if they need to identify their federal loan servicer. The federal loan servicers report loan information to NSLDS on a weekly basis.
On-Boarding Here’s how it works…
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In-School – Servicer Overview
The in-school stage begins when a loan is assigned to a TIVAS from the COD system and ends when a student drops below half-time enrollment
During the in-school stage, new loans are assigned to a servicer; in the case of an unsubsidized loan, interest accrues; financial literacy education; and borrowers learn about their servicer
Presented by: Brett Lindquist – Great Lakes Presented by: Brett Lindquist – Great Lakes
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In-School Stage: Commonly Asked Questions
Interest Statements: o How and when do borrowers receive interest notices?
o How do borrowers make interest payments on their unsubsidized loans while in school?
Loan Cancellation:• When a school cancels or reduces a students loan, do
they need to notify the servicer?
Presented by: Brett Lindquist – Great Lakes Presented by: Brett Lindquist – Great Lakes
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In-School Stage: Commonly Asked Questions
Borrower Contact: • What types of servicer communications and contact occurs while the borrower is in school?
• What happens to the borrower if the school is unaware that the borrower has left school?
Presented by: Brett Lindquist – Great Lakes Presented by: Brett Lindquist – Great Lakes
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Grace Period - Servicer Overview
The Grace Stage or “period” of the lifecycle begins when the student drops below half-time enrollment or graduates. Grace ends 6 months from the point of time from when the student ceased to be at least half-time
The grace period is important so that borrowers can select their payment period; continue to become familiar with servicer; financial literacy education; and prepare for the first payment
Presented by: Jim Harris – Nelnet Presented by: Jim Harris – Nelnet
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The Grace Stage Commonly Asked Questions
Borrower Communication: • How often and at what key times do the servicers communicate with the
borrower during the grace period?
Entering Repayment: • What is the servicer process if the student hasn’t selected a repayment
plan? • When is interest capitalized?• How early can borrowers apply for IBR?
Presented by: Jim Harris – Nelnet Presented by: Jim Harris – Nelnet
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The Grace Stage Commonly Asked Questions
What happens to the borrower if the school is unaware that the borrower has left school?
Reminder to Schools: When a borrower leaves campus, promptly report to NSLDS.
Of the borrowers who defaulted, most did not receive their full 6-month grace period due to late or inaccurate enrollment notification by the school.
Presented by: Jim Harris – Nelnet Presented by: Jim Harris – Nelnet
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Repayment - Servicer Overview
The repayment stage begins when the borrower’s grace period is over and ends when their loan is paid in full
During this stage, borrowers receive billing statements and make payments; they may change their payment plan and or obtain deferment/forbearance status; receive 1098 Interest documents for tax filing; and pay off their loan in full
Presented by: Dan Weigle – FedLoan Servicing
Presented by: Dan Weigle – FedLoan Servicing
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Repayment Stage Commonly Asked Questions
Making Payments:• What are the various ways a borrower can make payment
on their loan (i.e. mobile devices)?
• How and when do borrowers get a .25% reduction for automatic payments?
Trouble Making Payments:• How do the federal servicers counsel borrowers if they are
having trouble making their loan payments?
Presented by: Dan Weigle – FedLoan Servicing
Presented by: Dan Weigle – FedLoan Servicing
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Repayment Stage Commonly Asked Questions
Repayment In-School Status• What happens when a borrower returns to school? Are
they assigned a new servicer?
Public Service Loan Forgiveness (PSLF)• When should borrowers sign up for Public Service
Loan Forgiveness and what is the process?
Presented by: Dan Weigle – FedLoan Servicing Presented by: Dan Weigle – FedLoan Servicing
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Delinquency - Servicer Overview
Delinquency stage begins when the loan becomes past due – that is, when the borrower does not make the scheduled payment. Collection continues until the past due amount is satisfied or resolved
During delinquency, servicers contact borrowers by phone, e-mail, and mail and work with the borrower to resolve the delinquency
Presented by: Bob Leary – Sallie Mae
Presented by: Bob Leary – Sallie Mae
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Delinquency Stage Commonly Asked Questions
Delinquency – Borrowers
How early do servicers start to contact delinquent borrowers?
Is the borrower defaulted at 270 days delinquent?
What is the latest outreach effort to a delinquent borrower from the servicers?
Presented by: Bob Leary – Sallie Mae
Presented by: Bob Leary – Sallie Mae
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Delinquency Stage Commonly Asked Questions
Delinquency – Schools
Can schools stay on the phone with the borrower and talk with a servicer school support team (i.e. three way call)?
How do the servicers work with schools around delinquency efforts?
Presented by: Bob Leary – Sallie Mae
Presented by: Bob Leary – Sallie Mae
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Reporting Resources:
Centralized Loan Information - NSLDS: NSLDS Reports for Default/Delinquency Prevention:
School Portfolio Report
Delinquent Borrower Report
Individual Servicer Reports Provide greater level of detail Offer customization options Include only loans serviced by that organization
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•Servicing Background
•Overview of Loan Lifecycle including Frequently Asked Questions
– On-boarding– In-School– Grace– Repayment– Delinquent Repayment
•Questions for our Servicers
Department of Education Loan Services
Session Format
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