while you wait

1. Does your school have a PLA? If so, what are the top three reasons you decided to have one? • If not, what are the top three reasons that lead you to this decision? while you wait

2. PLA or not to ‘EH’ Debra Ensor, Wells Fargo Education Financial Services Kelli Izat, Frostburg State University Michael Poma, SunTrust Bank

3. Review of definitions/requirements • School options for PLA • An inside look from a school’s perspective • Sharing best practices Why are we here?

4. A “preferred lender arrangement” (PLA) is an arrangement or agreement between a lender and a covered institution…under which the lender provides education loans to the covered institution’s students or their families, and that relates to the covered institution recommending, promoting, or endorsing the lender’s education loan products.1 Preferred Lender Arrangements, PLA’s

5. “Any action that a [school] takes to recommend, promote, or endorse the education loan products of a lender that provides…education loans to students attending the [school] triggers the preferred lender arrangement requirements. The actions a [school] may take to recommend, promote, or endorse the education loan products of a lender are not limited to including the lender on a preferred lender list.”2 • This may be either intentional or unintentional by the school. • If you have a disproportionate private loan volume from one or two lenders, you may have unintended PLA’s with that lender or lenders. PLA continued In English, your institution has a list on the webpage or on paper

6. Schools who furnish private loan lender lists to their students and parents are considered to have Preferred Lender Arrangements with those lenders included on the list. • A PLA exists if a school recommends, promotes or endorses a lender, even if this is not in the form of a PLA Student Loan Marketplace counts as a PLA Bursar or front desk says, ‘x’ lender offers a loan

7. Actual Preferred Lender Arrangement • Comprehensive written list or web list • Third party list • No referral process School options

8. Three of the criteria required in compiling a Preferred Lender List require you to explain your choices. • There is no language per se about the necessity to issue an RFI • However, you will need to have evidence that you have made informed decisions RFI or no RFI

9. Think of 8 – 10 questions about private loans that are important to your students, your office and your institution and create a one-pager • Utilize the best practices of other schools • Ask your lender partners for their “boilerplate”- their pre-prepared RFI response, customized for your school KISS theory

10. “…a school that wants to provide basic information to the school’s students and their parents may provide a comprehensive list of lenders that have made loans to the school’s students or parents in the past three to five years (or some other period) and that have indicated that they would continue to make such loans. The school should not provide any additional information about the lender, including, for example, the percentage of the school’s loans made by the lender. Comprehensive list The school must provide a clear statement that a borrower can choose to use any…lender.”

11. “…if a [school] includes certain lenders on the list and leaves other lenders off the list, the Department views the [school] as recommending, promoting, or endorsing the lenders on the list over the lenders that it has chosen to leave off the list regardless of whether the [school] includes a disclaimer on the list, asserting that the [school] does not recommend, promote, or endorse the lenders on its list, despite whatever disclaimers the school may attach to the list.” Make sure you include everyone, unless the company is no longer in business

12. The Department does not consider an institution that refers its students to a third party entity that maintains a comprehensive, neutral listing of private education lenders to be participating in a [PLA] as long as the institution ensures that the listing is broad in scope, does not endorse or recommend any of the lenders on the list and the lenders on the list do not pay the third party entity to be placed on the listor pay the third party entity a fee based on any loan volume generated. However, if an institution retains a third party entity to develop a customized lender list for the institution to provide to its students as a resource…the Department does consider the institution to be participating in, and subject to the requirements of, a [PLA].” Third party • Finaid-L • Student Lending Analytics

13. No referral

14. Remember: • “Any action that a [school] takes to recommend, promote, or endorse… education loan products…triggers the preferred lender arrangement requirements.” • This includes no literature or brochures. • No one at your institution may ever discuss any lender with prospective student families. The same rules apply to the comprehensive list providers. No referral approach Is this an advantage for the school or for the student?

15. You are not permitted to display any brochures… • No employee of your school is permitted to reference any alternative loan program without triggering the PLA requirements… • You’re concerned about the level of customer service you’re providing to students and parents… • Your students are left searching the web Ask yourself: Is this method meeting the needs of my institution, students and university? Shhhh, is the word

19. What are some of your colleagues doing?

20. Common for parents to want student to have a loan in their name. Do not want to take PLUS Loan. • Talk to parents about variable vs. fixed interest rates. • Let them know that if the student doesn’t repay the loan they are liable for the entire balance anyway because they are the co-borrower. • Make parents aware of federal and possible alternative loan forgiveness for deceased borrowers. • Talk to students about applying for federal loans and other aid first. Counseling Students Frostburg says a PLA allows them to counsel their students

21. FSU requires all students to do a private loan entrance counseling before we will certify a private loan. • Great Lakes Counseling Students Other options: Mapping Your Future

22. Provide a place where parents and students who do not have experience with private loans can start researching loans. • Increases time management in the office • Helps protect students from “fly by night companies”. • More likely to ensure smooth processing and receive funds on time • Provides and increased level of customer service Why Have a Preferred Lender List?

23. FSU completed the RFI process with a committee the first year we posted a preferred lender list. • Created an RFI questionnaire that was sent to lenders. • Gave lenders a deadline for completing and returning questionnaire. • Created a committee and supplied them with a copy of the questionnaire, a list of scoring criteria, a scoring sheet, and scale for scoring, and each lender’s response. • Made sure committee was composed of individuals both in and out of the financial aid office. Request for Information (RFI)

24. Tried to keep lender questionnaire as short as possible while still acquiring all important information. RFI Questions

25. FSU focused less on interest rates and more on customer service. Scoring Criteria • Alternative / Private Loan Lender List Selection Criteria • 1) Online interfaces / online applications • 2) Toll-free numbers • 3) Stability / Number of years in the student loan business • 4) Ability to process via Scholarnet • 5) Ability to send funds via EFT through Scholarnet • Variety of products, loans for non-degree students, loan for prior • balances, less than half-time status, loans for students who don’t meet SAP, etc. • 7) Front end or back end fees? • 8) Reasonable interest rates? • 9) Are any borrower benefits offered? • 10) Grace period?

26. Before giving any lender information to committee members, a scale for rating the loan products must be made. • FSU used a scale similar to academic grades. • Lenders were given a grade of A through D on each of the individual criteria. • An overall grade for the lender was derived by calculating an average of all of the individual criteria scores. Grading Scale

27. Each committee member was given a worksheet to fill out with a grade for each criteria, and a place for an overall grade for each lender. Calculating Scores

28. Identify a threshold that will be used to decide whether a lender makes it onto the preferred lender list. • FSU included everyone who scored an overall grade of A, B, or C. • FSU decided not to include anyone who requires students to be a resident of a certain state or member of a certain credit union in order to apply. Setting Criteria for Being Included on the Preferred Lender List

29. Title X guidelines require that financial aid office’s review their preferred lender list each year. This does not mean that a full RFI is required each year. • FSU sends out a compressed RFI to each lender on our list and any lender who has requested to be on our list each year in February. • Having lenders complete a small RFI annually insures that you have the correct information on file about each lender and that their loan programs have not changed. • Once the completed RFI’s have been received the information is kept on file for auditing purposes. Any necessary adjustments to the list itself are than made. Renewing Preferred Lender List What about the annual report?

30. Schools are required to disclose to students who is on their preferred lender list, why they are on it, and that students are not required to borrow from someone on the school’s list. • To comply with regulations FSU posts all of it’s information regarding it’s preferred lender list online on an “Alternative Loans” page. Disclosure to Students

35. The preferred lender list • A statement information students that they are not obligated to borrow from a lender listed on FSU’s preferred lender list. • The MD College Loan Code of Conduct • A list of RFI questions • A chart showing a summary of RFI responses • Sample private loan application disclosures from each lender on the lender list • A copy of the private loan self-certification form and instructions on how to obtain the information necessary to fill the form out • A link to FSU’s private loan entrance counseling. Online Information Disclosure

36. American University • Bowie State University • Frostburg State University • John’s Hopkins University • McDaniel College • MICA • Mount St. Mary’s University • Salisbury University • UMBC • University of Delaware • University of Maryland, College Park Other school’s in Tri-statewith a PLA Have you changed your mind and want to be added to this list?

37. http://www.frostburg.edu/ungrad/faid/alternativeloans.htm Example Questions?? • Debra.B.Ensor@wellsfargo.com • kizat@frostburg.edu • Michael.poma@suntrust.com

38. HEOA, p. 40 • Fed. Register 10/28/09, page 55630, col. 2, last paragraph • DCL ID: GEN-09-08 • Fed. Register 10/28/09, page 55630, col. 1, last paragraph • Fed. Register 10/28/09, § 601.10(a) through (c) • Fed. Register 10/28/09, § 601.20(a) and (b) • Fed. Register 10/28/09, § 601.21(a)(2)(ii) and (iii) • Fed. Register 10/28/09, § 601.21(c) • Fed. Register 10/28/09, § 601.21(c)(6) • Fed. Register 10/28/09, § 601.21(c)(2)(ii) • Fed. Register 10/28/09, §601.12(b) • HEOA, p. 71 • Fed. Register 10/28/09, page 55630, col. 2, second paragraph Resources