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Improper Loan Servicing and Collection Appeal Information for Schools on Adjustments and Appeals

Page 186 FY 1998 Official Cohort Default Rate Guide

When is a defaulted loan consideredimproperly serviced for cohort default ratepurposes?

A defaulted FFEL Program loan is considered to have defaulteddue to improper servicing 1 if:

the borrower never made a payment;AND

the school can document that the lender failed toperform one or more of the following activities:

v send at least oneletter

(other than the finaldemand letter) urging the borrower or endorserto make payments on the loan (if the lenderwas required to send such letters);

v attempt at least one telephone call to theborrower or endorser (if such attempts wererequired);

v submit a request for pre-claims assistance tothe guaranty agency (if such a request wasrequired);

v send a final demand letter to the borrower (ifrequired);

AND/OR

v submit a certification (or other evidence) thatskip tracing was performed (if required).

Servicing and collection activities performed by thelender after the final demand letter has been sent willnot be considered when determining if a loan hasbeen properly serviced for cohort default ratepurposes.

1 34 CFR Section 668.17(h)(3)(viii)(A)

Note


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Information for Schools on Adjustments and Appeals Improper Loan Servicing and Collection Appeal

FY 1998 Official Cohort Default Rate Guide Page 187

A defaulted Direct Loan Program loan is considered to havedefaulted due to improper servicing 2 if:

the borrower never made a payment ;

AND

the school can document that the Direct Loan servicerfailed to perform one or more of the followingactivities:

v send at least one letter (other than the finaldemand letter) urging the borrower or endorserto make payments on the loan (if the DirectLoan servicer was required to send suchletters);

v attempt at least one telephone call to theborrower or endorser, if such attempts wererequired, unless the borrower or endorser isincarcerated or is residing outside a State,Mexico, or Canada;

v send a final demand letter to the borrower (ifrequired);

AND/OR

v document that skip tracing was performed ifthe Direct Loan servicer determined it did nothave the borrowers current address.

Servicing and collection activities performed by theDirect Loan servicer after the final demand letter hasbeen sent will not be considered when determining ifa loan has been properly serviced for cohort defaultrate purposes.

2 34 CFR Section 668.17(h)(3)(viii)(B)

Q.Q. Does the DirectLoan servicer have torequest pre-claimsassistance in order for aDirect Loan Programloan to be consideredproperly serviced?A.A. No, there is no pre-claims assistance activityin the Direct Loan

Program.

Note


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Is a loan considered improperly serviced forcohort default rate purposes if the servicingconducted on the loan does not meet therequirements outlined in 34 CFR Section682.411?No. The requirements outlined in 34 CFR Section 682.411 definethe steps a lender must take in order for the lender and guarantyagency to qualify for federal payments on a loan. The requirementsoutlined in 34 CFR Section 668.17(h) form the only basis on whicha school may submit a cohort default rate appeal based onimproper loan servicing and collection.

When is a defaulted loan considered properlyserviced for cohort default rate purposes?

A defaulted FFEL Program loan is considered to have beenproperly serviced if:

the borrower made a payment ;OR

the loan servicing records indicate that the lenderperformed each of the following activities, if required:

v sent at least one letter (other than the finaldemand letter) urging the borrower or endorserto make payments on the loan (if the lenderwas required to send such letters);

v attempted at least one telephone call to theborrower or endorser (if such attempts wererequired);

v submitted a request for pre-claims assistanceto the guaranty agency (if such a request wasrequired);

v sent a final demand letter to the borrower (ifrequired);

AND/OR


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v submitted a certification (or other evidence)that skip tracing was performed (if required).

A defaulted Direct Loan Program loan is considered to have been

properly serviced if:

the borrower made a payment ;OR

the loan servicing records indicate that the DirectLoan servicer performed each of the followingactivities, if required:

v sent at least one letter (other than the finaldemand letter) urging the borrower or endorserto make payments on the loan (if the DirectLoan servicer was required to send suchletters);

v attempted at least one telephone call to theborrower or endorser, if such attempts wererequired, unless the borrower or endorser isincarcerated or is residing outside a State,Mexico, or Canada

v sent a final demand letter to the borrower (if

required);AND/OR

v submitted a certification (or other evidence)that skip tracing was performed if the DirectLoan servicer determined that it did not havethe borrower's current address (if required).


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What are some examples of properly andimproperly serviced loans for cohort defaultrate purposes?

The following chart provides a summary of the relevant collectionactivities associated with 15 loans. Each loan has been identifiedas being properly or improperly serviced based on the collectionactivities identified on the chart.

Examples of Properly and Improperly Serviced LoansType

ofloan

Datedemand

letter(other than

finaldemand

letter) sent

Datetelephone

callattempted

Date pre-claims

assistancerequested,if required

Date finaldemand

letter sent

AddressKnown

Date ofskip-

tracing

Datepaymentmade byborrower

Serviced

SF 11/11/1998 01/14/1999 04/15/1999 05/15/1999 Yes Not required None Proper

D1 02/08/1999 03/15/1999 Not required 08/08/1999 Yes Not required None Proper

SU None None None None No 08/09/1999 None ProperD1 None None Not required None No 04/14/1999 None ProperSL None None None None Yes Not required 06/12/1999 Proper

D2 None None Not required None Yes Not required 09/18/1999 ProperSL 02/08/1999 None 04/12/1999 06/18/1999 Yes Not required None ImproperD1 05/30/1999 None Not required 12/22/1999 Yes Not required None ImproperSU None 06/16/1999 09/16/1999 11/11/1999 Yes Not required None ImproperD2 None 01/01/1999 Not required 08/09/1999 Yes Not required None ImproperSF 02/16/1999 07/09/1999 None 09/11/1999 Yes Not required None ImproperSL 06/09/1999 02/22/1999 08/21/1999 None Yes Not required None ImproperD2 02/22/1999 05/13/1999 Not required None Yes Not required None ImproperSF 01/15/1999 02/27/1999 05/15/1999 None No None None ImproperD1 03/14/1999 05/12/1999 Not required None No None None Improper

Which schools are eligible to submit animproper loan servicing and collection appeal?

If a school's most recent official cohort default rate [in this casefiscal year (FY) 1998] is equal to or greater than 20.0 percent, theschool may file an appeal alleging improper loan servicing andcollection if it believes that one or more defaulted FFEL Programand/or Direct Loan Program loans included in its official cohortdefault rate calculation did not receive loan servicing activitiesspecified in 34 CFR Section 668.17(h). 3

A school does NOT have to be subject to sanctions tosubmit an appeal on the basis of improper loanservicing and collection, but the school's official cohortdefault rate must be 20.0 percent or greater.

3 HEA Section 435(a)(3) and 34 CFR Section 668.17(h)

Note


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Improper Loan Servicing andCollection Appeal EligibilityChecklist

To be eligible to appeal its official cohort default rate on thebasis of improper loan servicing and collection, a school mustmeet ALL of the following criteria:

the schools most recent official cohort defaultrate is 20.0 percent or greater;

AND

after reviewing the loan servicing records fordefaulted loans included in the schools officialcohort default rate, the school believes thatsome of the loans were improperly serviced asdescribed in 34 CFR Section 668.17(h)(3)(viii);

AND

the school has NOT previously appealed theofficial cohort default rate at issue on the basisof improper loan servicing and collection.

Why should a school submit an improper loanservicing and collection appeal?

If eligible, a school should submit an improper loan servicing and

collection appeal if it believes that there are improperly servicedloans, as defined in 34 CFR Section 668.17(h), in its official cohortdefault rate, and it has not previously appealed the official cohortdefault rate based on allegations of improper loan servicing andcollection.

The following checklist summarizes the criteria for an improper loanservicing and collection appeal. A school should review thechecklist to determine if it can appeal on the basis of improper loanservicing and collection.

For which cohort default rates may a schoolsubmit an improper loan servicing andcollection appeal?

The sanction(s) to which a school is subject determines whichcohort default rates a school may appeal on the basis of improperloan servicing and collection.


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If the school is NOT subject to sanctions, but its mostrecent official cohort default rate is 20.0 percent orgreater, it may ONLY appeal its most recent officialcohort default rate (in this case FY 1998) based onallegations of improper loan servicing and collection.

If the school is subject to initial loss of FFELProgram, Direct Loan Program, and/or Federal PellGrant Program eligibility, it may appeal on the basis ofimproper loan servicing and collection any or all of thethree most recent official cohort default rates on whichthe loss is based as long as the school has notpreviously challenged that fiscal years official cohortdefault rate on the basis of improper loan servicingand collection. This year, the school may appeal its

FY 1996, FY 1997, and/or FY 1998 official cohortdefault rates.

If the school is subject to extended loss of FFELProgram, Direct Loan Program, and/or Federal PellGrant Program eligibility, it may appeal on the basis ofimproper loan servicing and collection ONLY the mostrecent (in this case FY 1998) official cohort defaultrate.

If the school is subject to possible action to limit,suspend, and/or terminate (LS&T) its eligibility toparticipate in all Title IV Student Financial AssistancePrograms due to its most recent official cohort defaultrate, but it is NOT subject to initial loss of FFELProgram, Direct Loan Program, and/or Federal PellGrant Program participation, it may appeal on thebasis of improper loan servicing and collection ONLYthe most recent (in this case FY 1998) official cohortdefault rate.

Please refer to the Cohort Default Rate Effectssection beginning on page 35 for more information onsanctions.

Q.Q. If a school is subjectto both initial loss of FFELProgram, Direct LoanProgram, and/or FederalPell Grant Programeligibility AND LS&T,which official cohortdefault rates may theschool appeal on thebasis of improper loanservicing and collection?A.A. The school mayappeal its three mostrecent official cohortdefault rates, as long as ithas not previouslyappealed that year'sofficial cohort default rateon the basis of improperloan servicing andcollection.


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The following table summarizes the official cohort default rates thata school may appeal on the basis of improper loan servicing andcollection.

Official Cohort Default Rates That May BeAppealed on the Basis of Improper LoanServicing and Collection

If a school is subject to ... The school may...

no sanctions and has an FY1998 official cohort default ratethat is 19.9 percent or lower

NOT appeal

no sanctions but has an FY1998 official cohort default rateof 20.0 percent or greater

appeal FY 1998

initial loss of FFEL Program,Direct Loan Program, and/orFederal Pell Grant Programeligibility

appeal FY 1998, FY 1997*,and/or FY 1996*

extended loss of FFEL Program,Direct Loan, and/or Federal PellGrant Program eligibility

appeal FY 1998

LS&T only (based on FY 1998cohort default rate)

appeal FY 1998

LS&T AND initial loss of FFELProgram, Direct Loan Program,and/or Federal Pell GrantProgram

appeal FY 1998, FY 1997*,and/or FY 1996*

* Provided that the school has not previously appealed the cohort default rate on the basisof improper loan servicing and collection.


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What role does a guaranty agency have in aschools improper loan servicing andcollection appeal?

Guaranty agencies are responsible for responding to schools'requests for loan servicing records for FFEL Program loans thatthey guaranteed and currently hold.

A school can determine which guaranty agencycurrently maintains the guaranty on FFELProgram loans by the guarantor/servicercode that is reported on the loan record detailreport for each loan. Appendix A identifiesthe entity associated with each guarantor/ servicer code.

If a guaranty agency guaranteed and currently holdsdefaulted loans associated with 99 or fewer borrowersin a schools cohort default rate, the agency isrequired to provide all of the loan servicing recordsassociated with each borrowers loan included in thecohort default rate calculation.

If a guaranty agency guaranteed and currently holdsdefaulted loans associated with 100 or more

borrowers in a schools cohort default rate, theagency should identify a representative sample of theborrowers and only provide the loan servicing recordsfor those borrowers included in the representativesample. 4

Please refer to page 381 in the section entitled"Information for Guaranty Agencies on Adjustmentsand Appeals" for more information on how a guarantyagency identifies a representative sample.

4 34 CFR Section 668.17(h)(3)(ii)(B)( 2 )

Note


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A guaranty agency may charge a reasonable fee, notto exceed $10.00 per borrower file, for the loanservicing records provided to the school. 5

The guaranty agency must respond to a school'srequest for loan servicing records in a specified periodof time. If the guaranty agency does not respondwithin the required period of time, as outlined on page382, the school should advise the Department'sDefault Management Division, in writing, of the delay.

Please refer to the "Information for GuarantyAgencies on Adjustments and Appeals" sectionbeginning on page 377 for more information onguaranty agency responsibilities.

What role does the Department have in aschools improper loan servicing andcollection appeal?

The Department has two separate roles in a schools improper loanservicing and collection appeal. The Departments first role isresponding to a schools request for loan servicing records if theguarantor/servicer code is 555 or 0101. The Departmentssecond role is to review a schools improper loan servicing andcollection appeal.

The Department is responsible for responding to aschool's request for loan servicing records for FFELProgram loans currently held by the Departmentand/or Direct Loan Program loans.

v The Department's Default ManagementDivision is responsible for responding toschools' inquiries regarding FFEL Programloans that are currently held by theDepartment . These loans are identified on theloan record detail report with a guarantor/ servicer code of " 555 ". The address to submitloan servicing record requests to theDepartment's Default Management Division isprovided in Appendix A.

5 34 CFR Section 668.17(h)(3)(ii)(B)( 4 )


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v The Department's Direct Loan servicer isresponsible for responding to schools' inquiriesregarding Direct Loan Program loans . Theseloans are identified on the loan record detailreport with a guarantor/servicer code of " 0101. "

The address to submit loan servicing recordrequests to the Department's Direct Loanservicer is provided in Appendix A.

Even though the currentlender/servicer code for defaultedDirect Loan Program loans is 555, ALLinquiries regarding Direct Loan Programloans must be directed to the DirectLoan servicer.

The Department is also responsible for reviewing aschool's improper loan servicing and collection appealonce the school has received responses to all of itsrequests for loan servicing records. The Departmentwill review each allegation of improper loan servicingand collection listed on the spreadsheet submitted bya school as a part of its timely submitted appeal.

v If the Department determines that loans havebeen serviced improperly, the Department willremove the improperly serviced loans from the

school's cohort default rate and will notify theschool of its revised cohort default rate(s).

Please refer to page 33 of the "Cohort DefaultRate Calculation" section for information onsubtracting loans from the cohort default ratecalculation.

v If the school was previously notified that it wassubject to sanctions due to its cohort defaultrates and the Department determines that theschool's revised cohort default rate is below theapplicable sanction threshold(s), theDepartment will withdraw the notice that theschool is subject to the loss of eligibility toparticipate in any Title IV Student FinancialAssistance Programs due to the schoolsofficial cohort default rates.

Note


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v If the school is subject to possible limitation,suspension, and/or termination (LS&T) due toits official cohort default rate and the school'srevised cohort default rate is not below 40.1percent, and the school does not have any

other cohort default rate adjustment/appealspending before the Department, the school willbe referred to the Department's AdministrativeActions and Appeals Division for possibleLS&T from all Title IV Student FinancialAssistance Programs.

Please refer to page 37 of the "Cohort Default Rate Effects"section for more information on the effects of sanctionsassociated with official cohort default rates.

What if a schools request for loan servicingrecords or its appeal is sent to the wrongentity?

If a school submits its request for loan servicing records to the wrongentity, the request for loan servicing records will NOT be reviewedand the school could miss the deadline for submitting the request tothe correct entity.

The request for loan servicing records should be sent to theentity responsible for the loan. The entity responsible for the loan isidentified by the guarantor/servicer code that is reported on the loanrecord detail report for each loan.

The entities identified by the guarantor/servicercodes in the loan record detail report include guarantyagencies, the Departments Default ManagementDivision, and the Departments Direct Loan servicer."Appendix A" identifies the entity associated with eachguarantor/servicer code.

Improper loan servicing and collection appeals should be sent to

the Department's Default Management Division at the address onpage 211 once the school has received all of the responses to itsrequests for loan servicing records.

Note


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How can an improper loan servicing andcollection appeal affect the schools officialcohort default rate?

If, as a result of an improper loan servicing and collection appeal,the Department determines that a loan (or loans) should beremoved from the schools official cohort default rate calculation,the Department will remove the improperly serviced loan (or loans)from the numerator and the denominator of the schools officialcohort default rate calculation. 7 This generally lowers theschools official cohort default rate .

If the school received a representative sample ofloan servicing records and the Departmentdetermines that some of the loans included in the

sample were improperly serviced, the Department willextrapolate the results of the review over the entirepopulation of relevant defaulted accounts included inthe cohort default rate calculation. 8

Please refer to page 33 of the Cohort Default Rate Calculationsection for information on subtracting loans from the cohort defaultrate calculation.

Even though the Department may alter a schoolsofficial cohort default rate calculation(s), subsequentcopies of the school's official loan record detail report(s)will not reflect the change. Therefore, it is important tokeep a copy of the Department's final determinationletter as the record of the schools official cohort defaultrate(s).

What are the time frames and procedures forsubmitting an improper loan servicing and

collection appeal?Timing is critical when appealing an official cohort default rate onthe basis of improper loan servicing and collection. An overview ofthe time frames for the improper loan servicing and collection appealprocess is shown on the following page.

7 HEA Section 435(m)(1)(B)8 34 CFR Section 668.17(h)(3)(v)(B)

TIMING AND SUBMITTING

Note

Note


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A school must submit a request for loan servicing records to theappropriate entity(ies) and send a copy of the request to theDepartment within 10 working days of receiving the official

cohort default rate notification letter.

YES

NO NO

YES

Is the schoolsubject to theloss of FFEL,Direct Loans

and/or FederalPell Grant

Programs?

Does the entityreceiving the

school's requestcharge for loan

servicingrecords?

Within 30 calendar days , send a letter tothe Department stating that the school

would like to withdraw its improper loanservicing and collection appeal.

YES

NO

Within 30 calendar days , submit animproper loan servicing and collection

appeal to the Department.

Within 30 calendar days , send a letterto the Department stating that the

school is submitting its improper loanservicing and collection appeal with itstimely submitted erroneous data appeal

and/or new data adjustment.

Within 15 working days of receiving the request for payment,a school must provide full payment to the applicable entity and

send a copy of the payment to the Department.

Within 5 working days ofreceiving the records, aschool must request themissing and/or illegible

records and send a copyof the request to the

Department.

Upon receipt of the lastresponse to ALL of its requests

for loan servicing records, aschool must either:

Within 30 calendar days ofreceiving the school's request, the

entity receiving the request mustidentify a representative sample ofdefaulted loans and send the loanservicing records to the school and

a copy of the response to theDepartment.

Within 15 working days of receiving theschool's request for loan servicing

records, the entity receiving the requestmust identify a representative sample of

defaulted loans, send the list ofdefaulted loans to the school, send a

request for payment to the school, andsend a copy to the Department.

Within 15 working days ofreceiving the school's payment, the

entity responding to the requestmust send the loan servicing

records to the school and send acop of the letter sent to the school

Within 5 working days ofreceiving the school's

subsequent inquiry, the entityreceiving the request must

respond to the school's requestand send a copy of the response

to the Department.

Within 15 working days of receivingthe school's request for loan servicing

records, the entity receiving therequest must identify a representativesample of defaulted loans and send

the loan servicing records to theschool and send a copy of theresponse to the Department.

Upon receipt ofthe records,

does the schoolbelieve thatthere are

missing and/orillegible

records?

Diamond = QuestionBox = Time frames for schoolsOval = Time frames for guaranty agencies/Direct Loan servicer


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Pleaserefer topage 215for asampleloanrecorddetailreport.

The following pages provide a step-by-step description of the timeframes and procedures associated with an improper loan servicingand collection appeal.

Step 1. Within ten working days of receiving its official cohortdefault rate, a school must review its official cohortdefault rate notification letter and this Guide todetermine if it is eligible to submit an improper loanservicing and collection appeal.

Please refer to page 191 for a detailed discussionregarding which schools are eligible to submit animproper loan servicing and collection appeal.

Step 2. If eligible to submit an improper loan servicing andcollection appeal, within the time frame describedin Step 1 (i.e., within ten working days of receiving its

official cohort default rate), a school must submit thefollowing to each entity that the school believes holdsa loan that could be improperly serviced.

A letter requesting the loan servicing recordsfor defaulted loans included in the school'scohort default rate.

A school should refer to the Sample Requestfor Loan Servicing Records LETTER on page216 to assist in developing the letter.

A copy of the entire relevant official loanrecord detail reports(s)

A school can determine which entity currentlymaintains the guaranty on the loan by theguarantor/servicer code that is reported on theloan record detail report. The addresses forthe relevant entities to which the request mustbe submitted can be found by cross-referencing the guarantor/servicer code on the

loan record detail report with the guarantor/ servicer codes in Appendix A.

Note

Time frames

may overlap.Read ALLsteps.

Please referto page 216for samplecover letter.

Example

Example


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Step 3. Within the time frames described in Step 1 (i.e.within ten working days of receiving its official cohortdefault rate), send the Department's DefaultManagement Division a copy of each letter requestingloan servicing records. A school does NOT need to

send a copy of its loan record detail report to theDepartment.

If the school does not meet these 10-working-day time frames, the school's request will notbe processed, and the Department will notreview the improper loan servicing andcollection appeal. This means the school willNOT be eligible to continue with the improperloan servicing and collection appeal process.

The chart shown on the next page provides an overview of theMATERIAL that should be included in a schools request to theguaranty agency/Direct Loan servicer for loan servicing records.

Note


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Within the time frames described in Step 2 on page 202 , thefollowing MATERIAL , to request loan servicing records, should besent to the relevant guaranty agency/Direct Loan servicer .

The section behind Tab 1 contains:

A letter on the schools letterhead with the schools OPE ID number; a statement indicating that the school is requesting

loan servicing records; a reference to the applicable cohort default rate; the signature of the schools President/CEO/Owner,

followed by a signature block providing the signersname and job title;

AND a notation that a copy of the letter will be sent to the

Departments Default Management Division at theaddress shown on page 211.

Schools only need to send a copy of the letter tothe Departments Default Management Division.It is not necessary to send copies of the loanrecord detail report to the Departments DefaultManagement Division at this time.

Schools should refer to the Sample Request for

Loan Servicing Records LETTER, on page 216.The section behind Tab 2 contains:

Copies of the entire relevant loan record detailreport(s) .

Schools should refer to the Sample LOAN RECORDSDETAIL REPORT on page 215.

Tab 1

Tab 2


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Step 4. If the entity from which the school requested loanservicing records charges a fee for the records, within15 working days of receiving the request forpayment for the requested loan servicing records, aschool must provide full payment. A school that fails

to provide full payment within 15 working days willNOT receive the requested records.

If the entity responding to the schools requestfor loan servicing records does NOT charge afee, please proceed directly to Step 5.

Step 5. Within five working days of receiving the loanservicing records, if:

the school finds that a record identified as apart of the representative sample of defaultedloans is missing or illegible and the schoolwishes to review the record, it must request themissing or illegible record from the entity thatidentified the record as a part of the sample.

A loan servicing record is not consideredmissing or illegible if all the necessaryelements noted in 34 CFR Section668.17(h)(3)(viii) can be identified. Nor is aloan servicing record considered missing orillegible if collection history documents arepresent and legible. Therefore, a school mayonly request additional documentation if theloan servicing record in question does not havethe necessary material present to determine ifthe elements specified in 34 CFR Section668.17(h)(3)(viii) are present.

a school is notified that the requested loanservicing records are currently held by theDepartment, the school must submit therequest for these records to the DepartmentsDefault Management Division. The schoolshould submit this request to the address listedon page 211.

Step 6: Within 30 calendar days of receiving the finalresponse to ALL of the school's requests for loanservicing records, determine whether or not each loanwas properly or improperly serviced.

Note

Note

Q.Q. How long does aguaranty agency/DirectLoan servicer have torespond to a school'sinitial or subsequentrequest for loan servicingrecords?A.A. The time frames for aguaranty agency/DirectLoan servicer to respondvary. Please refer topage 201 for an overviewof the guarantyagency/Direct Loanservicer time framesduring the improper loanservicing and collectionappeal process or to the"Information for GuarantyAgencies on Adjustmentsand Appeals" section onpage 377 for a moredetailed description of thetime frames associatedwith a guarantyagency/Direct Loanservicer response.


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If a school is subject to initial loss of eligibilityto participate in the FFEL Program and/orDirect Loan Program, and the school's appealof that loss is unsuccessful, the school will beliable for certain costs associated with FFEL

Program loans certified and delivered andDirect Loan Program loans originated anddisbursed by the school. A school's period ofliability with regard to these costs begins 30calendar days after the school receives noticethat it is subject to initial loss of eligibility toparticipate in the FFEL Program and/or DirectLoan Program. The period of liability endsupon the earlier of the withdrawal of theschool's ajustment/appeal, the resolution of theschool's adjustment/appeal, or the 45 th

calendar day after the date the schoolsubmitted its completed adjustment/appeal tothe Secretary for review. 9

OR

If the school wants to continue with theimproper loan servicing and collection appealprocess, it must:

v submit the school's improper loanservicing and collection appeal to the

Department within 30 calendar days ofreceiving the last response to ALL of itsrequests for loan servicing records;

OR

v submit the improper loan servicing andcollection appeal with a timely initiatedand submitted erroneous data appealand/or new data adjustment.

If a school is submitting an improperloan servicing and collection appeal,erroneous data appeal, and/or new dataadjustment, it may submit theadjustments/appeals simultaneously bythe latter of:

9 HEA Section 435(a)(2)(A) and 34 CFR. Section 668.17(b)(6)(ii)

Note


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within 30 calendar days ofreceipt of the last response toALL of the school's requests forloan servicing records;

OR within 5 working days of receipt

of the last response to ALL of theschool's erroneous dataallegations;

OR

within 5 working days of receiptof the last response to ALL of theschools new data adjustmentallegations.

If a school is appealing its three mostrecent cohort default rates, it shouldsubmit all three improper loan servicingand collection appeals to theDepartments Default ManagementDivision in a single mailing.

Step 9. Within the time frames described in Step 8 , if theschool has decided to continue with the improper loan

servicing and collection appeal process, compile a listof the improperly serviced loans that the schoolwishes to submit to the Department for review.

A school should use the Sample Improper LoanServicing and Collection SPREADSHEET andSPREADSHEET INSTRUCTIONS on pages 219 and218, respectively, to assist in the developing the list.

Step 10: Within the time frames described in Step 8 , submitthe following to the Departments DefaultManagement Division using the address on page 211:

Note

Please referto page 219

for a samplelist.Example

Due date forsubmitting the

appeal to theDepartment .


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a letter indicating that the school is submittingan improper loan servicing and collectionappeal;

A school should refer to the Sample ImproperLoan Servicing and Collection Appeal LETTERon page 220 to develop the letter.

copies of the loan servicing responses from theguaranty agency/Direct Loan servicer;

the Improper Loan Servicing and CollectionSPREADSHEET as described in Step 9;

AND

copies of the relevant loan servicing record(s).If a school fails to timely submit its improperloan servicing and collection appeal to theDepartment's Default Management Division,the Department will not review the appeal andwill return all appeal-related material to theschool.

The following page provides an overview of the MATERIALthat should be included in a schools improper loan servicingand collection appeal.

.

Note

Please referto page 220for a sampleletter.

Example


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Within the time frames described in Step 8 on page 206, thefollowing MATERIAL, to support an improper loan servicing andcollection appeal, should be sent to the Departments DefaultManagement Division at the address shown on page 211.


A LETTER on the schools letterhead with

the schools OPE ID number; a statement indicating that the school is submitting an improper loan

servicing and collection appeal;

a reference to the applicable fiscal year(s); a certification sentence that indicates that the information provided in

the appeal, under penalty of perjury, is true and correct; 10

a list of the other adjustment/appeals the school intends to submit tothe Department;

the signature of the schools President/CEO/Owner, followed by asignature block providing the signers name and job title.

AND a notation that a copy of the letter will be sent to the relevant

entity(ies).

Schools only need to send a copy of the letter to the guaranty agencyand/or Direct Loan servicer. It is not necessary to send the entireappeal to the guaranty agency and/or Direct Loan servicer.

Schools should refer to the Sample Improper Loan Servicing and CollectionAppeal LETTER on page 220.


Copies of the responses to the school's requests for loan servicingrecords. 11


A SPREADSHEET of all the alleged improperly serviced loans.

Schools should refer to the Sample Improper Loan Servicing andCollection Appeal SPREADSHEET and SPREADSHEETINSTRUCTIONS for creating the list on pages 219 and 218, respectively.


A copy of the alleged improperly serviced loan servicing records. 12

Schools should maintain copies of the loan servicing recordssubmitted to the Department.

The Department will review only the informationsubmitted with the improper loan servicing and

collection appeal and will not consider informationsubmitted after the regulatory deadlines. TheDepartment will send the school and each involvedentity written notification of its decision. TheDepartments decision is final and no furtheradministrative review is provided.

10 34 CFR Section 668.17(h)(3)(iv)(F)11 34 CFR Section 668.17(h)(3)(iv)(B) and (C)12 Id.

Tab 3

Tab 2

Tab 1

Note

Tab 4


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If sent by commercial overnight mail/courier delivery, theschool's improper loan servicing and collection appeal should besent to:

U.S. Department of EducationDefault Management DivisionATTN: Improper Loan Servicing

and Collection AppealPortals Building, Room 63001250 Maryland Avenue, SWWashington, DC 20024

If sent by U.S. Postal Service, the school's improper loanservicing and collection appeal should be sent to:

U.S. Department of Education

Default Management DivisionATTN: Improper Loan Servicing

and Collection AppealPortals Building, Room 6300400 Maryland Avenue, SWWashington, DC 20202-5353

The Department will not accept any appeal

correspondence by facsimile (fax) or e-mail.The Department recommends that a school send all appealcorrespondence return receipt requested or via commercialovernight mail/courier delivery. This will be useful to a school if it isasked to authenticate the timeliness of its appeal. A school shouldmaintain the documentation which verifies the receipt of the appealrelated material. In addition, a school should retain copies of alldocumentation submitted as a part of the appeal process.

Note


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_

Part II of the Improper Loan Servicing and Collection Appealsection outlines a situation in which a school would benefit fromsubmitting an improper loan servicing and collection appeal. Thispart also provides sample material that should be referenced by aschool when compiling the material that must be submitted by aschool during the improper loan servicing and collection appealprocess.

CONTENT REFERENCE FOR PART II

EXAMPLE of a situation that warrants a request for Loan ServicingRecords... ..........................................................214

Sample Official LOAN RECORD DETAIL REPORT.............................215

Sample Request for Loan Servicing Records LETTER.......................216

EXAMPLE of a situation that warrants the submission of anImproper Loan Servicing and Collection Appeal.................................217

Improper Loan Servicing and Collection Appeal SPREADSHEETINSTRUCTIONS.......................................................................................218

Sample Improper Loan Servicing and Collection AppealSPREADSHEET.......................................................................................219

Sample Improper Loan Servicing and Collection AppealLETTER .....................................................................................................220

PART II: Examples andSample Material


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EXAMPLE of a situation that warrants a request for Loan Servicing Records

Technology School received notification of its FY 1998 official cohort defaultrate on September 30, 2000. The schools notification included a hardcopy

of its FY 1998 official cohort default rate loan record detail report.

Within 10 working days of receiving its FY 1998 official cohort default ratenotification letter, the school:

determined that the school's FY 1998 official cohort default rate was 23.6percent and the school was eligible to submit an improper loan servicingand collection appeal;

reviewed the official loan record detail report to identify which entity(ies)was responsible for responding to the school's request for loan servicingrecords for defaulted loans (please refer to the sample Official LOANRECORD DETAIL REPORT on page 215);

According to the school's FY 1998 official loan record detailreport, the State Guaranty Agency was the entity responsiblefor responding to all of the school's requests for loan servicingrecords for defaulted loans.

made a copy of entire FY 1998 official LOAN RECORD DETAILREPORT;

AND

prepared a LETTER for the State Guaranty Agency, requesting arepresentative sample of loan servicing records (please refer to thesample LETTER on page 216).

On October 4, 2000, Technology School mailed the MATERIAL, viaovernight courier to the State Guaranty Agency at the address found inAppendix A, and sent a copy of the letter to the Departments DefaultManagement Division at the address on page 211.


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Sample Request for Loan Servicing Records LETTER

October 4, 2000

State Guaranty Agency OPE ID#: 000040

Guarantor/Servicer Code 111ATTN: Bob Bowen1234 Trueman RoadLusby, North Carolina 98765-4321

Dear Mr. Bowen:

Technology School, OPE ID# 000040 , is requesting the loan servicingrecords for the defaulted loans guaranteed and currently maintained byyour agency and included in our schools official FY 1998 cohortdefault rate.

Please see the enclosed loan record detail report.

Sincerely,

Timothy DavisTimothy Davis, President

Enclosures

cc: U.S. Department of Education, Default Management Division

Subject: Request for FY 1998 Loan Servicing Records

Technology School1212 Wedgewood LaneLeonardtown, Wisconsin 12345-6789(123) 456-7890

Sample Letter


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EXAMPLE of a situation that warrants the submission of anImproper Loan Servicing and Collection Appeal

Technology School received a response from State Guaranty Agency to itsrequest for loan servicing records on November 1, 2000. The State

Guaranty Agency did not charge for the loan servicing records. In addition,the State Guaranty Agency was the only guaranty agency from which theschool requested loan servicing records.

Within 5 working days of receiving the loan servicing records from theState Guaranty Agency, the school reviewed the records to determine if anyof the records were illegible or if the State Guaranty Agency had failed toprovide any of the records. Technology School determined that all of therecords were provided and each record was legible.

Within 30 calendar days of receiving the loan servicing records from the

State Guaranty Agency, the school: reviewed the loan servicing records and identified six loans that it

believed were improperly serviced in accordance with 34 CFR Section668.17(h)(3)(viii) (please refer to pages 186 through 191 to determine theparameters associated with improperly serviced loans);

made a copy of the State Guaranty Agency loan servicing recordresponse;

made a copy of the servicing records for those loans the school believedwere improperly serviced, in accordance with 34 CFR Section 668.17(h);

AND

prepared a LETTER to the Department's Default Management Divisionfor its improper loan servicing and collection appeal (please refer theSample Improper Loan Servicing and Collection LETTER on page 220).

On November 27, 2000, Technology School mailed the MATERIAL, viaovernight courier, to the Departments Default Management Division at theaddress on page 211 and sent a copy of the letter to the State GuarantyAgency at the address found in Appendix A.


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Sample Improper Loan Servicing and Collection Appeal SPREADSHEET

F Y 1 9 9 7 I m p r o p e r

L o a n

S e r v i c

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t h e p r e v i o u s p a g e . )


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