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Direct Loan Training
Wood Mason
U.S. Department of Education
Federal Student Aid
770/383-9662
1
What You Need To Know
Systems involvedCOD Common record
SAIGTG Mailbox – D/L Data Services and D/L
Servicing Delinquency Report
G5Funding
Drawdown funds
Return funds
22
What You Need To Know
Some things are the sameVirtually all Title IV regulations
Cash management regulations/policy
Interest rates*
Repayment plans**
Counseling
Promissory Note*FFELP PLUS 8.5%...D/L PLUS 7.9%
**Income Contingent/Alternative Repayment Plan unique to D/L
33
What You Need To Know
Some things are differentActual disbursementOrigination fee/rebate
Funding/Cash
ReconciliationProgram requirement
4
What You Need To Know
Benefits for schoolSingle Lender
Funds obtained from a single source
Processing commonality
One reporting system/database (COD)
One reporting vehicle - Common Record (CR)
5
What You Need To Know
Benefits to borrowersOne lender
Loan benefits unique to D/LPublic Service Repayment benefit
Direct Loan award integrated with other awardsOne source of information – the school
6
What You Need To Know
Keep this in mind…Schools control
Origination & Disbursement• Dates
• Adjustments
• Reduction to $0
Promissory notesOptions
7
What You Need To Know
Direct Loan Origination School determines eligibility Virtually same process as FFELP and Grants Same eligibility criteria
School calculates award Remember same loan types, amounts, and
annual/aggregate limits
School creates or “originates” the award in it’s resident system Originate is an event Create date is the date of origination
9
What You Need To Know
Direct Loan Origination School transmits Loan Origination Record
(LOR) to COD Loan ID xxxxxxxxxS11Gxxxxx001 Financial award number 001 Via “Common Record” or “Document” Document must be formatted in appropriate
schema
COD sends a receipt Customer Service Representative (CSR) will
email/call for malformed document
10
What You Need To Know
Direct Loan OriginationData is sent in “blocks” of informationEach block is reusable in the documentMultiple schools, borrowers, awards,
disbursements, etc
Data is edited in an “hierarchical” mannerData identified as accepted or rejected on
response Hard rejectWarning reject
11
What You Need To Know
Direct Loan OriginationCan be done via batch (Common Record)COD sends a common record response to
each submitted documentOnline individually All data entered field by field Creates loan IDWeb generated response option
12
What You Need To Know
14
i
University of the Study of Zen & Tai ChiCOD School Id xxxxxxxx
Pell School Id xxxxxx
Direct Loan School Id Gxxxxx
OPE Id 0xxxxx00
GAPS School Id xxxx
DUNS School Id xxxxxxxxx
Previous GAPS Pell School Id Not Applicable
Previous GAPS Direct Loan School
IdNot Applicable
What To Watch For
Direct Loan Origination Duplicate Loan ID Reject edit 031
Abbreviated Applicant File Reject edits 012 & 024 Student identifier match on current SSN,
current DOB and current last name for all submissions
Process to change identifiers D/L second match on SSN, DOB and CPS
transaction number
15
What To Watch For
Direct Loan Origination Anticipated/Actual disbursement data
must = loan amount (reject edit 117)Loan limits (reject edit 039)Exceed Combined Base Limit (reject edit
157) Additional Unsubsidized Eligibility
Complete address (warning edit 120)Citizenship status (reject edit 013 for
PLUS and 014 for Stafford)
16
What You Need To Know
PLUS loan requires credit checkD/L credit check looks for adverse credit
NOT credit worthinessAbsence of credit is not evidence of
adverse creditBorrower choice of follow-up
EndorserAppeal Pass on PLUS loanNot sure
19
What You Need To Know
PLUS loan requires credit checkCredit decision “stands” for 90 days on
COD websiteDenial linked to academic year submittedApproval linked to submitted loan
FFELP denial for same period of enrollment can offer Unsubsidized funds to now D/L borrower*
*School option
2020
What You Need To Know
PLUS loan requires credit checkSchool processWritten authorization requiredOnline via COD website
• Instant response
Loan Origination Record (LOR)Result returned on CR responseLoan can be accepted and built but credit
reject…edit code #036
21
What You Need To Know
PLUS loan requires credit checkStudentLoans.govSelf servicePLUS loan request includes instant credit
checkSeparate from eMPN for PLUS borrowerOptions for PLUS borrower
• Credit balance• Amount or up to COA• Appeal – Endorser – Pass – Don’t Know
22
What To Watch For
Direct Loan adverse credit criteria same as FFELPFFELP lenders could hold PLUS
borrower to higher standard*FICO scoreDebt to income ratioLoan amount
25
*Some borrowers could surprise you and pass the D/L credit check
What To Watch For
PLUS loan “Category of borrower” Reject edits 147, 148, and 149, Parent Graduate student No Grad Stafford requirement
• Must offer/explain
Parent dependent child “pair” uniqueUnique PLUS loan MPN
26
What To Watch For
PLUS loan acceptedAdverse credit decision (reject edit 036) Loan is built Stands for academic year Second Parent credit history not required Can be used for additional dependent child
PLUS loan• CFR 685.203
Credit Override• Successful appeal• Endorser amount
27
What You Need To Know
All MPNs have a 10-year “life”Paper and electronic
Status/Expiration returned on response file
Actual disbursement within 12 months of receipt at COD extends expiration date
30
What You Need To Know
Multi-year functionalityCan link to any “active” MPN
Single-year functionalityNew MPN each academic year
Single loan MPNEndorsed PLUS loan
MPN status “Inactive” when endorser linked to loan
31
What You Need To Know
eMPNBorrower driven
Fast and accurate
Viewable/retrievable/printable
Instant data to COD from StudentLoans.gov
32
What You Need To Know
Paper MPNCOD can printSend to borrower
Send to school
School can printMust mail to processing center
Must print manifest
Responsible for note
33
What You Need To Know
COD notificationCOD prints paper noteBorrower credit acceptance email
Send email to direct borrower to StudentLoans.gov
15th day send email reminder
30-day and 60-day mailed reminders of no response
34
What To Watch For
COD will link incoming LOR to MPN with latest expiration date
Loan links to MPN on SSN, DOB and first two characters of first nameSYF school must match Direct Loan
School Code and academic dates
COD will, under certain circumstances, link an actual disbursement to an expired MPN
36
What To Watch For
Multiple MPNs on the COD database not an issue
COD will reject actual disbursement without accepted/linked MPNReject edit 081
MPN IDxxxxxxxxxM11Gxxxxx001
xxxxxxxxxN11Gxxxxx001
37
What To Watch For
MPN status/link and expiration date returned on LOR response“A” accepted
“R” rejected or no MPN on file
“I” inactive
“P” pending note…no LOR on file to link to
38
What You Need To Know
Entrance counseling required for first-year, first-time borrowerFFELP counseling will stand for D/L*
Doesn’t have to be ED website/materials
MUST appropriate to loan type/program
SCHOOL determines if counseling is valid or not
*Same loan type
41
What To Watch For
43
Entrance counseling completed
StudentLoans.gov the place to go
Feeds directly to COD
Same loan type
Meets criteria for appropriate program
Person Information
44
Barbara DavisXxxxx123401/01/1900
12 Happy LaneMountain View, GA [email protected](202) 821-3953
What You Need To Know
Pending vs. Actual DisbursementPending disbursement and date is
“anticipated” future disbursement and datePart of LORNo impact on fundingDisbursement Release Indicator = FALSE
No need to change until ready to disburse
46
What You Need To Know
Pending vs. Actual DisbursementActual disbursement drives fundingOrigination fee and upfront instant rebate
assessed on actual disbursementDisbursement release indicator = TRUE*Report to COD via CRDisbursement #1 Sequence #1
*Software dependent
47
What To Watch For
Report ACTUAL DATE OF DISBURSEMENT AND AMOUNTChange if necessaryBorrower requestWithdrawalNo-showMistake
• Date• Amount• Can’t change date and amount in same
transaction
48
What To Watch For
Report ACTUAL DATE OF DISBURSEMENT AND AMOUNTMust report within 30 days of eventWarning edit 055
Can report actual disbursement up to 7 days prior to eventReject edit 050
49
What To Watch For
“Booked” LoanAccepted Origination record, MPN and
1st DisbursementBinding obligation between borrower
and EDBN document type under batch searchSystem generated file on first actual
disbursement only
Liability for funds with ED
50
What To Watch For
Advanced Funded SchoolsCurrent Funding Level (CFL)Corresponding available balance in G5
Calculate immediate needDraw funds from G5Award ID P268K11xxxxNet amountNOT student specific
Flexibility to avoid excess cash
51
What You Need To Know
Exit counseling required when no longer attending or drop below half-timeDoesn’t have to be ED website/materials
MUST be appropriate to loan type/program
SCHOOL determines if counseling is valid or not
NSLDS NewsLetter #26
53
Direct Loan Reconciliation
The process by which the Direct Loan Cash Balance recorded on the Department of Education system is reviewed and compared with a school’s internal records on a monthly basisIdentify and resolve discrepancies
Document reasons for their Ending Cash Balance
57
The process by which schools complete final processing at the end of a Direct Loan program year$0 Ending Cash Balance$0 unsubstantiated cash
$0 Unbooked disbursements
* PYCO date July 31st of the year following end of the award year
Program Year Closeout (PYCO)*
58
Tools and Resources
School Account Statement
COD Web site
DL Tools
Student Files
Financial Aid Office Reports
Business Office Reports
59
Tools and Resources
COD School Relations CenterCustomer Service Representative
Issue Resolution Specialists
COD web screensSummary Financial Information
Cash Activity
60
Tools and Resources
COD School Relations CenterWeekly monitoring e-mailsUnsubstantiated cash
30-day reporting monitoring
COD Reconciliation TeamDedicated reconciliation specialists
Problem solving
G5 assistance
61
School Account Statement
Generated on 1st weekend of the monthContains data through end of previous
month
Separate School Account Statement for each open award year
Different report format options
62
School Account Statement
Five Primary SAS ComponentsCash Summary
Disbursement Summary by Loan Type
Cash Detail
Loan Detail - Loan Level
Loan Detail – Disbursement Level
63
Program Year Closeout
67
July 31 of the year following the award yearCOD website-balance confirmation
screen
No unsubstantiated cash
No unbooked disbursements
No reporting of disbursements, no draws of cash, no reports
Reopening the year if necessary
67
What To Watch For
69
Work rejected data and submit corrections immediately
Report accurately and timely
Reconcile each and every month
Close your Program Year as soon as possible – DON’T WAIT UNTIL NEXT YEAR!
69
What You Need To Know
Slide 71
Contracted 4 additional Servicers for incoming volumeACS (Current Servicer)NelnetSallie MaeGreat Lakes Education Loan ServicesFedLoan Servicing (PHEAA)
COD generated D/Ls distributed at booking
71
What You Need To Know
Slide 72
Performance via competitionServicers are rewarded for providing
excellent default aversion techniques that deliver the desired results
Allocation of volume is performance based % of “In Repayment” Portfolio Dollars that go
into default % of unique “In Repayment” Portfolio
borrowers that go into defaultBorrower/school/FSA surveys
72
What You Need To Know
Slide 73
Will schools work with multiple Servicers?Yes, but FSA will attempt to keep your
borrowers “whole”
Will reports/reporting vary from Servicer to Servicer?Yes…we have chosen to allow the
Servicers to uniquely “brand”
73
What You Need To Know
Slide 74
Can a school select the Servicer with whom they wish to work?No. Loans will be dispersed to all
Servicers systemically as they book
How will a school know which Servicer has a particular loan?By looking at the loan in NSLDS
74
What You Need To Know
Borrower Services
Date due flexibility for all repayment plans
Electronic billing/correspondence
EDA and on-line payment options
Self-Service tools for borrowers
75
What You Need To Know
Slide 76
Default/Delinquency ManagementDedicated services to assist schools
with Cohort Default RateExceeds minimum regulatory due diligence requirementsEducates and informs borrowers as to the tools and options available to assist them in the management of their student loans
76
What You Need To Know
Slide 77
Default/Delinquency ManagementProvides outbound targeted calling campaigns along with inbound call center representatives to help borrowers become current Utilizes electronic communication methods such as email to keep borrowers informed about account status
77
What You Need To Know
Slide 78
Default/Delinquency ManagementDefault management results publishedServicers will partner with financial
literacy advocacy groups to educate borrowers and assist schools
Each servicer is encouraged to continually improve and compete among one another to deliver the best results for borrowers, schools, and FSA
78
Servicing FutureServicer SchoolContact
Borrower Contact
FedLoan Servicing (PHEAA)
NSLDS Servicer Code: 700579
School Phone:
800-655-3813
Web: www.myfedloan.org
Borrower Phone:
800-699-2908
Web: www.myfedloan.org
Great Lakes Educational Loan Services
NSLDS Servicer Code: 700581
School Phone:
888-686-6919
Web: www.mygreatlakes.org
Borrower Phone:
800-236-4300
Web: www.mygreatlakes.org
Nelnet
NSLDS Servicer Code: 700580
School Phone:
866-463-5638
Web: www.nelnet.com
Borrower Phone:
888-486-4722
Web: www.nelnet.com
Sallie Mae
NSLDS Servicer Code: 700578
School Phone:
888-272-4665Web:
www.opennet.salliemae.com
Borrower Phone:
800-722-1300
Web: www.salliemae.com79
Annual Loan Limits
YearDependent
Undergraduate
Independent Undergraduate
And Dep. Undergrad whose parent can’t borrow PLUS
Graduate/ Professional
1st $5,500(maximum $3,500
subsidized)
$9,500(maximum $3,500
subsidized)
Up to $20,500 each academic year
(maximum $8,500 subsidized)
2nd $6,500(maximum $4,500
subsidized)
$10,500(maximum $4,500
subsidized)
3rd and Beyond
$7,500(maximum $5,500
subsidized)
$12,500(maximum $5,500
subsidized)
Aggregate Loan LimitsBorrower Aggregate Limit
Dependent Undergraduate
$31,000 combined sub/unsubNo more than $23,000 in sub
IndependentUndergraduate*
$57,500 combined sub/unsubNo more than $23,000 in sub
Grad/Professional$138,500 combined sub/unsubNo more than $65,500 in sub
81
Interest RatesDirect Subsidized Loans for Undergraduate Borrowers
1st DisbursedOn or After
And Before Interest Rate
July 1, 2009 July 1, 2010 5.6%
July 1, 2010 July 1, 2011 4.5%
July 1, 2011 July 1, 2012 3.4%
All Other Direct Subsidized and Unsubsidized Loans 6.8%
Direct PLUS for Parents and Grad/Professional Students
7.9%
Direct ConsolidationWeightedAverage
8.25% Cap82