Transitioning to Direct Loans

1. Transitioning to Direct Loans

2. Pending Legislation Student Aid and Fiscal Responsibility Act – HR 3221 Passed the House of Representatives 9/17/2009 Mandatory Pell Grant funding 100% Direct Loans July 1, 2009 and forward Expand/modify Perkins Loan Program

3. Where are we now… • Transition Planning and Activities • Developed Customer Support plan for the transition that includes support for all phases of transitioning

4. Where are we now… • COD System capacity enhancements for 100% FFELP volume in progress, on time and on taget • FSA Customer Service Centers • Increased and trained staff • Monitor incoming volume • COD has dedicated OnBoarding Team to assist setup completion requests and “starts”

5. Where are we now… • Other FSA systems gearing up • myDirectLoan eMPN website • NSLDS • G5

6. Where are we now… • Teams designed for targeted support • Graduate/Professional • Small schools • Career Colleges • Community Colleges • HBCU, HSI, and Tribally controlled colleges • Foreign schools • Pacific Island Schools

7. Where are we now… • Selected 4 additional Servicers • Great Lakes Educational Loan Services • NelNet • Sallie Mae • AES PHEAA

8. Where are we now… • Training • Spring and Summer “new school” DL training • Direct Loan processing with EdExpress • Business Officers • Foreign Schools • Extensive new suite of DL training • Up to 4x per month after January

9. Where YOU Are Now… • FSA made benign changes to most school profiles • FSA made benign changes to most TG mailboxes • Does NOT obligate school to process Direct Loans

10. Where YOU Are Now… • What do you do next to be prepared • www.direct.ed.gov/participating.html • Complete setup information • CODSupport@acs-inc.com • Request completion of FSA setup • 800/848-0978 • DLEnrollment_FSA@ed.gov • FSA Transition Team

11. Something old, something new… • …to make you comfortable and hopefully not blue…

12. The same Virtually all of the regulations Origination/Certification Loan type and interest* MPN Counseling *FFELP PLUS 8.5%, D/L PLUS 7.9%

13. Differences Disbursement Origination Fee/Upfront rebate Reconciliation Monthly

14. Differences Cash Direct Loan schools calculate and draw immediate need Single source – G5 Direct Loan Code Main Campus/Additional Location

15. What’s New? • Beginning in March 2010, the eMPN website will become the myDirectLoan website. • The myDirectLoan website will continue to allow users to: • Complete an electronic promissory note • View and print electronic disclosure statements

16. What’s New? Beginning in March 2010, the myDirectLoan website will be enhanced to: • Allow Parents and Graduate Students to complete a PLUS Application • Allow Direct Loan borrowers to complete Entrance Counseling • Allow endorsers to endorse a PLUS Loan electronically • Allow borrowers to electronically appeal credit check decisions during the application process

17. Voila!

18. myDirectLoan log in

19. PLUS Process- New Features • Save all Parent/Student relationships to reduce re-entry in subsequent Award Years • Parents are able to submit multiple students and schools during a single application process • Allow Parents to resubmit applications for subsequent Award Years • Send electronic notifications to all schools included in a completed PLUS loan application • Streamline the Application/Promissory Note Process • Parent/Student Identifier and School information submitted in the PLUS loan application will be pre-populated on all applicable promissory notes

20. 6 New DL School Options • Default values will be populated in the School Options fields • The new options are not award year specific • Default values for the one time update are listed below:

21. Entrance Counseling The “What You Need” section of the myDirectLoan homepage provides users a guide for Entrance Counseling Information on Entrance Counseling and a link to the PIN site is provided

22. Direct Loan Processing Cycle 22

23. Originate • Similar to Grants/FFELP • Confirm eligibility • Determine award/loan amount • Create award • School transmits award/loan origination data to COD • Via Common Record and same transmission as Pell Grant data

24. Originate • PLUS loan requires credit check • Systemic check via Loan Origination submission • School check via COD website • Or after March 27, 2010… borrower initiate • Denial Packet • Explanation for denial/appeal process • Pre-filled endorser form • Materials to submit endorser form

25. Direct Loan Processing Cycle

26. Disbursements • Advanced Funded Schools • Calculate immediate need • Draw funds from same source as other Title IV award funds - G5 • Flexibility to avoid excess cash • Remember Cash Management Rules • Must submit data within 30 days of event • Actual Disbursement Data substantiates drawn funds • ALWAYS submit actual date

27. Master Promissory Note • One lender, one MPN • No linked MPN no disbursement • Paper or electronic • All MPNs 10-year active • Provides borrower mobility • School selected options • COD School Options screen • COD prints paper note options

28. Booked loan • A “Booked” Loan is a GOOD thing… • Accepted Origination record, MPN and 1st actual disbursement • Is now a binding obligation between borrower and ED • 30-Day Warning Report • ID’s unbooked loans for school

29. Reconciliation • Monthly basis • School reconciles internally • Financial aid office/business office • School reconciles externally • COD/G5 • School Account Statement (SAS) • Know where the money is • COD Reconciliation Specialists

30. Direct Loan Processing Cycle

31. School Services Online 32

32. School Services • Default/Delinquency Management • Pre-Repayment Counseling • Calls begin two months prior to repayment • Emails to assist with repayment options • Delinquency Counseling • Calls begin at 31 days (22 calls) • Letters begin at 7 days delinquent (12) • Call campaigns ($80k plus) • Late Stage Delinquency Slide 33

33. DL.ed.gov (current servicer)

34. Borrower Services Repayment options tailored to individual need Standard, Graduated, & Extended Income Based Repayment Plan Income Contingent Repayment Plan* Alternative Repayment Plan* Public Service Loan Forgiveness* *Unique to Direct Loan Program

35. Borrower Services Date due flexibility for all repayment plans Electronic billing/payments EDA and on-line payment options Self-Service tools for borrowers

36. Borrower Services Repayment incentives Online form submission with electronic signature Forbearance/Deferment

37. Some Things To Consider… Resources FSA Support Tools Staff Staff IT IT Staff IT Staff Staff Reconciliation IT Staff Resources FSA Support Resources Tools Reconciliation IT FSA Support Reconciliation Tools Staff

38. Some Things To Consider… Commonality with Grants Same person Same origination process Same disbursement process Same transmission vehicle

39. Some things to consider… Resources/Staff Commonality of awards Same system (COD) Same institution solution Work with your software provider to understand the DL process and fields

40. Some things to consider… COD staff resources for assistance COD Customer Service Representatives COD Issue Resolution Specialists COD Reconciliation Specialists

41. Questions and Comments E-mail contact for more information... Barbara.davis@ed.gov DLenrollment_FSA@ed.gov

42. Questions and Comments Questions?