Federal Loan Servicing

1. Federal Loan Servicing Brenda Cox, UHEAA/Cornerstone Wanda Hall, Edfinancial Matt Stover, Nelnet

2. Federal Loan Servicers • Aspire Resources Inc. • CornerStone • ESA/Edfinancial • FedLoan Servicing (PHEAA) • Granite State – GSMR • Great Lakes Educational Loan Services, Inc. • MOHELA • Navient (formerly Sallie Mae) • Nelnet • OSLA Servicing • VSAC Federal Loans

3. Key Events • March 31st letter from the Department of Education to Senator Harkin • Establish Common Performance Metrics • Incentive Based Pricing • Provide Not For Profit Servicers Additional Volume • Move Towards Comparable Portfolios Across Servicers

4. Key Events • June 9th2014 – President Obama Delivers Speech on Student Loan Debt • Expands the Pay As You Earn Program • Focus on borrower satisfaction and repayment • Negotiated Rulemaking starts in early 2015 to expand Pay As You Earn

5. Metric Changes • Contract changes incorporated into Title IV Additional Servicers (TIVAS) and Not For Profit Servicers (NFPs) servicing agreements • All Federal servicers will be measured under a common set of performance metrics

6. Outreach • Third-Party Debt Relief companies • In grace period and owe more than $25K • Delinquent borrowers • 90-180 days delinquent • 181-270 days delinquent • Undergraduate borrowers with higher-than-average debts • > $50K and entered repayment prior year • Borrowers in deferment and forbearance because of financial hardship or unemployment

7. Outreach • Campaign target outcome: • Improve awareness of IDR • Increase application and adoption of IDR plans • Reduce borrower delinquency and default • Visit repayment estimator tool • Apply for IDR • Contact servicer to apply for IDR • 80% of opened emails opened within 24 hours • Negligible after 36 hours

8. Outreach • Preliminary Results • 90-180 days delinquent • 15.63% made a payment; 2.54% IDR • 181-270 days delinquent • 12.48% made a payment; 2.05% IDR • Owe $50+ and left school within 1 year • 36.73% made a payment; 9.41% IDR • Deferment and forbearance • 34.61% changed to in repayment • Grace and owed more than $25K • 12.94% IDR

9. Trends • Total outstanding student loan debt has more than doubled since 2007 by approximately 85% • Outstanding student loan debt has shifted from FFEL to Direct Loans • 2007 DL 21% • 2014 DL 62% • 2014 Release of FSA Data by IHEP

10. Trends • Majority of outstanding loans/borrowers are currently in repayment • Grace 5% • Repayment 58% • Deferment 14% • Forbearance 13% • Loan dollars in default 10% • In loan dollars

11. Trends • 13% of borrowers enrolled in IDR • Standard repayment 10 years or less: 61% • Standard repayment more than 10 years: 9% • Graduated more than 10 years: 2% • Income-driven: 13% • IBR 9% • ICR 3% • PAYE 1% • Alternative: 2% • Other: 3% • By Borrower

12. Trends • 74% of Direct Loans in repayment are being repaid • Nearly ½ of loan dollars not paid on-time are less than 91 days delinquent • Current repayment 37% • 31-90 days delinquent 3% • 91-180 days delinquent 2% • 181-270 days delinquent 1% • 271-360 days delinquent 1% • Transferring to DMC <1%

13. Standardization Efforts • Interest capitalization • Due diligence • SCRA • Credit reporting • Payment application • Reaffirmation letter • Proof on income documentation

14. Customization • ONE-SIZE DOESN’T FIT ALL • Portfolio analysis • Technology available • Borrower demographics • Age of portfolio • Age of borrowers • Where reside • Type of school attended • Length of attendance

15. Customization To Better Serve Borrowers • Edfinancial Services • IDR campaigns – emails and postcard reminders of need to recertify for IDR (upcoming or past) • Email notification that received correspondence • Email notification that processed correspondence • Delinquency driven email and call campaigns • Age driven correspondence – “New and Edgy” • 100 Club – All hands on deck – Own accounts

16. Customization To Better Serve borrowers • Nelnet • Borrower communication channels • Enhanced communication • Document submission capabilities • Web/Mobile interfaces

17. Customization To Better Serve Borrowers • UHEAA/Cornerstone • Borrower Centric • Targeted Communications • Innovation & Resource Usage • Quality Control • Training & Professional Development

18. NFP’s Eligibility for common origination and disbursement (cod) • FSA Change Request Outlined Requirements • Intersystem Testing Scheduled Beginning Fall • Servicers Begin Receiving New Loans in January • Small Initial Allocation Pool

19. Consolidation update • New process starting January 1st, 2014 • Joint session between TIVAS and GA community to discuss issues. • Issues must be addressed when moving from one provider to multiple providers

20. Consolidation update • Inclusion of collection costs if the LVC is not received. • Invalid fields or naming conventions causing file load errors. • Pending changes for overpayments.

21. Total and Permanent Disability Discharge (TPD) Update • Since July 1, 2013 (effective date of new regulations) • Intents to apply – 299K • Application initial review – over 226K • Outgoing correspondence – over 1.5M • Borrowers approved – over 162K • New SSA method for qualifying for TPD has represented 15-20% of the monthly FSA approvals

22. Thank you!