EDUC SPARTM - The New York Times · 2019. 11. 21. · MENTOR EDUC SPARTM OFAMERIC October 19 2015 REVIEW REPORT: PublicService Loan Forgiveness (PSLF) Program SERVICER: Pennsylvania

EDUCMENTORSPARTM

OFAMERIC

October 19 2015REVIEW REPORT

: Public Service Loan Forgiveness (PSLF) ProgramSERVICER : Pennsylvania Higher Education Assistance Agency (PHEAA)/ FedloanServicingREVIEWER( S ) :

QUARTER PERIOD: July 1 2015 – September 30 2015

REVIEW PERIOD: April 1, 2015 June 30 , 2015

REVIEW OBJECTIVES :

1. To ensure that only non-defaulted loansmade underDirectLoansweredeemedeligible

2 . To ensure that qualifyingpayments countedas oneof the required 120 qualifyingmonthly payments from one of the eligible repayment plans.

3. To ensure that the borrowerswere employed fulltime at a qualifyingpublic service

organizationon the date ofmonthly payments.

STANDARDS :

Statutory Regulatory

The regulation governingPublic Service Loan Forgiveness is found at:

loans - - 34 CFR 685. 219

METHODOLOGY

Sampling

The Operations Services selected a sample of40 accounts from the Public Service LoanForgiveness (PSLF) Program . Within the 40 sample accounts we requested the following

category : 10 Approved Existing Accounts ; 10 Approved Transfer Accounts ; 10 Denied NewAccounts; and 10 Denied Existing Accounts .

Terminology

The termsbelow may bereferenced in the observation :

Thispresentation, documentor report and analyses are provided Internal-Use Only and may notbeshared outside of FederalStudentAid without the permission of FSA -Operations Services. This

presentation, document, report or analysis was created to aid the DepartmentofEducation comply with

its legalobligation to collect federal student loan debt. These work productsmay also be used to informthe creation of future Departmentand FSA policies.

Approved Existing Account -- > This is an Employee Certification Form ( ) that is approved

on the for the borrower and currently has their loans serviced with PHEAA as well as at

least one approved ECF on file. Since an approved ECF is on file, PHEAA will need to start the

PSLF tracking for this borrower .

Approved Transfer Account -- > This is where an ECF is approved for the borrower (borrower

does not have any other ECF s on file and PHEAA will need to get the loans and then start the

PSLF tracking. This is a new borrower and these accounts are deemed as "Approved Transfer " .

Denied New Account-- > This is an ECF that has incorrect/missing information and cannot be

processed . PHEAA more than likely does nothave all the loans on their system yet and that iswhy the borrower is listed as "Denied New " without further PSLF processing until an approved

ECF is on the account. Then PHEAA willneed to reach out for all the loans or the rest of the

loans. But this would be the first ECF the borrower has sent in and it is denied with no other

ECFs on file .

Denied Existing Account- > This is an ECF that has incorrect/missing information and cannot

be processed until corrected . PHEAA has the borrower s loans on their system and received at

least one approved ECF for the borrower , but the PSLF process cannotmove along until an

approved ECF is received deeming this borrower as " Denied Existing" .

Materials Requested

Werequestedthe following materials from the PHEAA :

Quarter ending June 30 , 2015 spreadsheet of requested accounts.Copies of borrower s history and activity report, and applicable screenshots .

tracker for each account.

of EmployeeCertification Form ( ECF) .

Testing

We performed the following tests to meet our review objectives:

Reviewed the borrower ' s history and activity report, and applicable screenshots to ensurethat the borrower is on an eligible repayment plan , and to validate the date of monthlyqualifying payments .Reviewed payment tracker to ensure that the servicer had an accurate number ofqualifying payments .Reviewed the employee certification form to ensure that the borrower is employed fulltime at a qualifying public service organization (s) on the date of monthly qualifyingpayments

OBSERVATION # 1:Before the review began for this quarter, PHEAA informed FSA of 7 accountsoutof the 40

samplesrequestedwith manualand auto paymentcountingerrors. There was an accountwith amanualpaymentcountingerror, sampleborrower where the processerundercounted aqualifyingpaymentby 1 payment. There were 6 accountswith auto paymentcounting errors:Sample borrowers the system either over counted or undercountedqualifyingpayments.PHEAA informedFSA that the CR is projected to be in productionfor the quarter (calendar

year 2015).

RECOMMENDATION:FSA requires that PHEAA review and identify other borrowers with like issue accounts thathaveauto paymentcounting errors. Also PHEAAmustretrain staff on how to manually review the

qualifying payments correctly .

CORRECTIVE ACTION PLAN :

PHEAA should evaluate their process and validate that any accounts put through this script to

count payments is analyzed accurately . PHEAAmust also provide a plan to retrain staff that

processes the manualreviews of qualifying payments. FSA would like PHEAA to provide a

corrective action plan in writing by November 2 , 2015 to prevent future errors of this type.

PHEAAMANAGEMENTRESPONSE:

PHEAAwill continue to monitor the auto supplementalaccountsasdiscussedinPHEAA s responses to the previous and QuarterMonitoringreview periods. The

manualcountingerrorhasbeen addressed with the originalprocessoras well as the rest

of staff to ensure these errors are notmade in the future. A copy of this documentationis attached to this reportto show the communication in addition to the refreshertraining.

S RESPONSE ON DECEMBER 17, 2015 :

FSA would need to know the status of CR014901-02 as it was projected to be in

production quarter calendar year 2015 .

MANAGEMENT RESPONSE :

--- --OriginalMessage- --- -

From : -- [mailto : _ @ _ org ]

Sent: Tuesday, December 22 , 2015 2: 30 PMTo :

Cc:

Subject : PSLF Auto Payment Counter Correction

As promised, I am providingyou an update on thesystem request relativeto thesystemicpaymentcountingissues thathadbeen identifiedduringpriorreviewsofPHEAA

processing. This system changenow excludespaymentsmade 30 daysprior to theduedate,non-borrowerpayments, single paymentswhich satisfiedmore than a singleduedate.

Aswith allchangerequests, pre-productiontestingwasperformedto validate that thenewsystem codewasfunctioningas intended. Assuch, thechangerequestwasplacedintoproductionon 12/ 13/2015.

Best Regards

_ TelephoneFax

=

Thismessagecontainsprivileged and confidentialinformation intended for the above

addresseesonly. If you receive this messagein error please delete or destroy thismessage

and/ orattachments.

The sender ofthis message willfully cooperate in the civil and criminalprosecution of any

individual engaging in the unauthorized use ofthis message .

Code: PHEAA

S RESPONSE ON FEBRUARY 8 , 2016 :

PHEAA informed FSA that the CR went into production during the 4th quarter calendar year2015 . Based on the status update above, FSA would like PHEAA to provide a monthly

progress report starting February 2016 .

OBSERVATION # 2 :

Sample borrower _ is an approved existing account with PHEAA. The borrower made apaymentof $ 236 .51on April 7 , 2014 for due date April 7 , 2014 and was on a forbearance. The

April 7 , 2014 paymentwas applied to the due date May 5 , 2014 . A paymentof $ 229.82 was

made by the borrower on May 21, 2015. The borrower s paymentof $ 229.82 received on June5 , 2014 with a due date of June 5 , 2014 was not counted in the payment tracker. FSA believes

that the payment made on April 7 , 2014 should nothave been applied to the May 5 , 2014 due

date to count as a qualifying payment as the borrower was on a forbearance. TheMay 21, 2015payment is over 15 days after the due date ofMay 5 , 2014 and the payment isnot a qualifying

payment. The borrower s paymentmade on June 5 , 2014 should be counted as qualifying

payments.

REQUIREMENT:

In accordance to Requirement204.04 of the current PSLF Single Servicerrequires thatpayments made while the borrower is in an in -school in - grace, deferment, forbearance or asuspended activity status shall not be included as qualifyingpayments for the Public Service

Loan Forgiveness Program .

RECOMMENDATION :

IfPHEAA believes that FSA s observation is inaccurate , please provide a chart of the dates in

questioned to show how under any circumstances the borrower is eligible for the payments .

PHEAA should supply FSA with this chart by November 2 , 2015

CORRECTIVE ACTION PLAN:

IfPHEAA concurs with the observation PHEAA mustmake the correction immediately andinform the borrower of the adjustments . FSA would like PHEAA to evaluate their process and

validate that any accounts put through this script to count payments is analyzed accurately . As

explained in Observation # 1, FSA would like PHEAA to provide a plan to retrain staff that

processes the manual reviews of qualifying payments. PHEAA should supply FSA with acorrective action plan in writing by November 2 , 2015 to prevent future errors of this type.

PHEAA MANAGEMENT RESPONSE:

PHEAA does not agree with observation # 2 . There was a layout issue with the conversion file thatwas originally missed with this account. After reviewing the accountwith PHEAA Compliance , achronologicaloutline of the accountwas produced. The borrower was on automatic debit with a duedate of the 7 They renewed their IBR on 4 /6 / 14 and the automatic debit payment for Aprilextracted4 / 7 /14. However, the prior servicer also applied a forbearance to the borrowers account from 4 /6 / 144 /7 / 14 (due to IBR processing to cover the due date ) . The IBR was approved and the borrower wasset up for the automatic debit to begin 5 / 21/ 14 . Then , on 5/ 22 /14, theborrower changed theirdue date from the 5 " ( therefore, the nextpaymentwas due 6 /5 / 14). The May 2014paymentwas evaluated incorrectly on the original Payment Tracker. PHEAA was previously using the4 / 7 /14 payment to satisfy the 5 /5 / 14 due date . After further review , this is notthe borrowers due dateand it should have been 5 /21/ 14 . This allows for the paymenton 5 /21/ 14 to apply to this due date .The borrowers count does change however as Compliance has asked that we request to remove theforbearance on 4 / 6 /14-4 /7 / 14 to allow the Aprilpayment to count. The borrower did have the paymentpulled and the forbearance was added in error. The updated Payment Tracker is attached to thisdocument. Information in the activity portion of the confirms PHEAA' s finding. PHEAA wouldlike to discuss the use of payments during a deferment/ forbearance with PHEAA Compliance andthen discuss our this review with FSA confirm the findings/rulings.

S RESPONSE ON FEBRUARY 8 ,

FSA willnot authorize PHEAA to remove a forbearance from April 6 , 2014 to April 7,

2014 for a payment madeby the borrower on April 7 2014. Please refer to Requirement

204.04 below :

204. 04 Payments made while the borrower is in an in -school,

in-grace , deferment, forbearance or a suspended

activity status shallnotbe included as qualifying

payments for the Public Service Loan Forgiveness

Program .

CORRECTIVE ACTION PLAN :

FSA reviewed the updated payment tracker and a payment made by the borrower on June5 , 2014 is stillnot counted as a qualifying payment. PHEEA needs to update the

payment tracker to show the payment made on June 5, 2014 as a qualifying payment andprovide FSA with a copy of the letter to the borrower explaining the adjustment for our recordsby February 16 , 2016 .

OBSERVATION # 3 :

Sample borrower approved existing accountwith PHEAA. The borrower is on a

Graduated repayment plan, which is an ineligible plan , and the payment tracker showed the timeframe of this plan from July 21, 2012 to April 21, 2015 . FSA asked PHEAA to check the status

as to when the last ineligible notification reminder was sent to the borrower. PHEAA further

researched this information and explained that the ineligible payment email wasnot sentbecausethe account is on a General Forbearance . FSA further reviewed the borrower ' s account and it

showed that the borrower had been on a Forbearance type, not consecutively , since December 8,2011.

RECOMMENDATION:

FSA would like PHEAA to provide the amountof time for each Forbearance type the borrower

received to date . Please provide written guidance on how PHEAA determines a communication

is sent while the borrower is on a Forbearance.

CORRECTIVEACTION PLAN:

IfPHEAA cannot producewritten guidance, please provide a rationale as to why any writtencommunication should not go out to borrowers while on a Forbearance. Wewould liketo have a

response in writingby November 2 , 2015.

MANAGEMENTRESPONSE:

The complete Forbearance andDefermenthistory for the borrower is shown below .

GeneralForbearance

ReducedPaymentForbearanceHalf TimeSchoolDefermentHalf Time SchoolDeferment

Late SchoolNotificationForbearance

GeneralForbearanceGeneralForbearanceGeneralForbearance

GeneralForbearance

DelinquencyForbearance

12/08/11 12/10/ 11

12/11/ 11 03/11/ 1206 /04 / 12 12 /31/ 1201/01/13 - 01/22/ 13

01/23/ 13 02/ 26 / 13

03/21/13 - 07/20/ 1307/21/13 - 01/20/ 1401/21/ 14 - 05/ 20/14

06 /21/ 14 08 /20/ 1408/21/ 14 - 10/ 31/ 14

GeneralForbearanceDelinquency Forbearance

GeneralForbearance

Delinquency ForbearanceDisaster Forbearance

11/01/14 - 02/ 28 / 1503/21/ 15 04 / 15 / 15

04/ 16 / 15 07 /16 / 1507/21/ 15 08/25/ 15

08/ 26 / 15 09 /25 / 15

Communication, which includesinformationon eligible paymentplans, is sentto borrowerswhen theirEmploymentCertification Form (ECF) is approved, when theloans areconvertedto FLS, and when

paymenttrackinghasbeen completed. In addition, quarterly emails are sentto the borrowerwhenenrolled in an ineligiblerepaymentplan. A letter ratherthan an emailwouldbe sent in the eventavalid emailaddress is notavailable. Quarterly emails are sentin March, June, September, and

December. Itis importantto notethat PHEAA is notrequired to sendthis type of communicationaspartof the FSA program requirements.

The only receivedand approvedECFreceivedfor this borrowerwas approvedon 05/06/ 15. At thetimethenextquarterly emails were sent, theborrowercontinuedto bein a forbearancestatus;

therefore, an emailwas notsent.

S RESPONSEON FEBRUARY 8 , 2016 :

FSA believes that the borrower cannotbenefit from the PSLF program if she is on anineligible plan for over 2 years so as a courtesy PHEEA should have notified the

borrower by means of the quarterly email notification as described above after the

borrower ' s ECF was approved on May 5 , 2015. Please provide a copy of the ECF

approval letter datedMay 5 , 2015 to FSA by February 16 , 2016 .

FINAL ANALYSIS :

There was an error rate of 23 % on this review (9 /40 ) FSA would expect PHEAA to have an

error rate of 5 % or less when analysis is of PSLF accounts .

EDUCMENTORSPARTM

STN OFAMERIC

February 22, 2016REVIEW REPORTTOPIC : Public Service Loan Forgiveness (PSLF) Program

SERVICER : Pennsylvania Higher Education Assistance Agency (PHEAA )/ Fedloan

ServicingREVIEWER ( S ) :

QUARTER PERIOD: October 1, 2015 December 31, 2015

REVIEW PERIOD : July 1, 2015 – September 30, 2015

REVIEW OBJECTIVES :





STANDARDS :



loans - - 34 CFR 685. 219

METHODOLOGY

Sampling

The Operations Services selected a sample of40 accounts from the Public Service LoanForgiveness (PSLF) Program . Within the 40 sample accounts we requested the following

category : 10 Approved Existing Accounts ; 10 Approved Transfer Accounts ; 10 Denied NewAccounts; and 10 Denied Existing Accounts .

Terminology

The termsbelow may bereferenced in the observation :

Thispresentation, documentor report and analyses are provided Internal-Use Only and may notbeshared outside of FederalStudentAid without the permission of FSA -Operations Services. This



Approved Existing Account-- > This is an Employee Certification Form (ECF) that is approved

on the account for the borrower and currently has their loans serviced with PHEAA as well as atleast one approved ECF on file. Since an approved ECF is on file , PHEAA will need to start the


Approved TransferAccount-- > This is where an ECFis approved forthe borrower (borrower

doesnothaveany other ECF s on file) and PHEAA willneed to get the loansand then start the

PSLF tracking. This is a new borrowerand theseaccounts are deemed as " Approved Transfer" .

Denied New Account -- > This is an ECF that has incorrect/missing information and cannotbe

processed . PHEAA more than likely does nothave allthe loans on their system yet and that is

why the borrower is listed as " Denied New " without further PSLF processing until an approved

ECF is on the account. Then PHEAA will need to reach out for all the loans or the restof theloans. But this would be the first ECF the borrower has sent in and it is denied with no other

ECF s on file .

Denied Existing Account - - > This is an ECF that has incorrect /missing information and cannot


least one approved ECF for the borrower , but the PSLF process cannot move along until an

approved ECF is received deeming this borrower as "Denied Existing"

Materials Requested

Werequestedthe followingmaterials from the PHEAA:

Required documents for the QuarterendingSeptember30 2015 spreadsheetof requestedaccounts.

Copies ofborrower s history and activity report (BHAR), and applicable screenshots.tracker for each account.

Copies of Employee CertificationForm (ECF)

Testing

We performed the following tests to meet our review objectives :

Reviewedthe borrower' s historyand activity report, andapplicablescreenshotsto ensure

that the borrower is on an eligible repayment plan, and to validate the date ofmonthlyqualifying payments .Reviewed payment tracker to ensure that the servicer had an accurate number ofqualifying payments .Reviewed the employee certification form to ensure that the borrower is employed fulltime ata qualifying public service organization (s) on the date ofmonthly qualifyingpayments.

OBSERVATION # 1 PAYMENT (S ) NOT COUNTED AS A QUALIFYING PAYMENT( S ) :

borrower is an approved existing accountwith PHEAA . The borrowermade a

payment of $ 27. 30 on July 30, 2015 for due date August 7 , 2015. According to the paymenttracker PHEAA did not count this paymentas a qualifying paymentdue to no ECF. FSA further

reviewed theapproved ECF and end date is August 3, 2015 so the payment should be counted as

a qualified paymentfor the month of August.

Sample borrower is an approved existing accountwith PHEAA . The borrowermade a

paymentof $ 38 . 87 on August 12, 2015 for duedate September 6 , 2015. According to the

paymenttracker PHEAA did not count this payment as a qualifying payment due to no ECF.FSA further reviewed theapproved ECF and the end date is August 14, 2015 so the payment

should be counted as a qualified payment for the month ofSeptember.

Sampleborrower an approved existing accountwith PHEAA. Theborrower wason an

incomedriven repayment plan with a $0 payment from April 21, 2014 to May 21, 2015 .

According to the payment tracker PHEAA missed a total of 3 qualifying payments fordue datesNovember21, 2014 ; December21, 2014; and January 21, 2015based on approved ECFwith abegin date of November 8 , 2014 and end date of February 13, 2015. The $ 0 paymentshould be

counted as a qualified payment for themonth ofNovember, December, and January .

RECOMMENDATION:

would need to review and identify other borrowers with like issue accounts where the

qualified payment was counted based on the due date and not by the start and end date of the

qualifying employment (ECF ). Please provide FSA the results of the query and also add this toFSA Issue Tracker Item .

RESPONSEFROM POLICYAND OFFICEOFGENERALCOUNSEL:

For this concern, Program Managementreached outto theOfficeof GeneralCounsel (OGC) foradditional guidance. OGC respondedback that these typesof payments should count for PSLF.Based on the requirements, as currently written, to qualify for PSLF, the borrowermustmake 120separate on-timemonthly paymentson an eligibleloan and be employed full-timeby a publicservice organization at thetime they makethe 120 payments. Furtherin our Q & A s PSLF(# 13and 15 ) FSA also ties the requirementbelow for qualifying employmenttowhen the paymentwas made, notto the period for which the paymentapplies.

REQUIREMENT:

205 .01 The PSLF servicer shall determine if the qualifying payments weremade while in qualifying

employment

. Counteach month from the StartDateto EndDate (Section 3 Item 2a

ofECF), for which a qualifying paymentwasmade. Forthe first

month, the actualpaymentdatemustbeon orafter the Start Date.

For the lastmonth, the actualpaymentdatemust be before the End

Datelastmonth of each EmploymentCertification. ForPart-time

employees, these conditions apply to each employer.ii. For partial payments made, the actual payment date is the date on

which the total of partial payments equals to or is greater than thefull scheduled payment due amount for that month.

iii. The scheduled payment date will determine the calendar month forwhich the qualifying payment is counted.

Example: Scheduled payment date is July 1but actual payment date is June 29. Assuming theborrower does not have previous delinquencies, the qualifying payment applies to July.


� PHEAA must make the correction immediately and inform the borrower of the adjustment.Please provide FSA a copy of the letter to the borrower and an updated payment tracker for ourrecords by February 29, 2016. PHEAA must evaluate their process to ensure that qualifyingpayments are counted correctly based on the requirements above and supply FSA with acorrective action plan, in terms of a clean-up effort, in writing no later than March 2, 2016. FSAwill review the plan and provide any necessary guidance.

OBSERVATION #2 MANUAL REVIEW ERRORS:

� Sample borrower __is a denied new account with PHEAA. FSA reviewed the account overviewinformation and it showed that the borrower made a payment of $132.42 on April 30, 2013 at theprior servicer. The payment tracker showed that the April 30, 2013 payment was applied to theJune 28, 2013 due date and the payment was not counted as a qualifying payment. The April 30,2013 payment should be counted as a qualifying payment for the month of April and applied tothe April 28, 2013 due date.

� Sample borrower __is a denied existing account with PHEAA. The borrower was on an incomebased repayment plan with a monthly payment of $195.81 from May 7, 2012 to March 7, 2013and on an income based repayment plan with a monthly payment of $249.41 from April 7, 2013to March 7, 2014. According to the payment tracker PHEAA missed a qualifying payment of$1,000 made on due date March 7, 2013 and a qualifying payment of $249.41 made on due dateMarch 7, 2014.

RECOMMENDATION:

� PHEAA must retrain staff on how to manually review the qualifying payments correctly.


� PHEAA must make the correction immediately and inform the borrower of the adjustment.Please provide FSA a copy of the letter to the borrower and an updated payment tracker for ourrecords by February 29, 2016. PHEAA must provide a plan to retrain staff that processes themanual reviews of qualifying payments. FSA would like PHEAA to provide a corrective actionplan in writing by March 2, 2016 to prevent future errors of this type.

OBSERVATION#3 TRANSFERREDACCOUNTSNOT PROCESSEDCORRECTLY:

� Sample borrower __is an approved transfer account with PHEAA. FSAreceived the borrower’spayment tracker with no informationfrom the prior servicer in terms of repayment plan,repayment term, and no qualifying payments. FSA further reviewed the borrower’s BHAR fromthe prior servicer and it showed that the borrowermay havebeen on an eligible repayment planwith qualifying payments.

RECOMMENDATION:

� PHEAAwould need to reviewthe borrower’s accountagain and provide an updated paymenttracker.

CORRECTIVEACTIONPLAN:

� FSA would likePHEAA to providethe updated payment tracker by February 29, 2016,and wewill discuss,if necessary,any observations during 3rd Quarter monitoringcall.

OBSERVATION#4 APPROVEDEXISITINGACCOUNTSNOT PROCESSEDCORRECTLY:

� Sample borrower __is an approved existing accountwith PHEAA. FSA received the borrower’spayment tracker and it showed at total of 4 qualifying payments fromApril 21,2012 to January21, 2013 for Loans 1-4; however the borrower have a total of 14 Loans. The payment trackeralso showed approved ECFs from August 21, 2006 to July 30, 2015. FSA further reviewedcopies Payment Eligibility Letters sent to the borrower where the latest date of August 19, 2015showed a total of 17 qualifying payment for Loans 1-4; 13 qualifying payments for Loans 7-14; atotal of 12 qualifying payments for Loan 12.

RECOMMENDATION:

� PHEAAwould need to review the accountagain and provide an updated payment tracker to showthe total amount of qualifying payments.


� FSA would likePHEAA to providethe updated payment tracker by February 29, 2016 and wewill discuss,if necessary,any observations during 3rd Quarter monitoringcall.

� Sample borrower __is an approved existing accountwith PHEAA. FSA received the borrower’spayment tracker and showed a total of 14 qualifying payments from June 13, 2013 to July 13,2014. The payment tracker also showed approved ECFs from March 18, 2013 to July 1, 2015.FSA reviewed a copy of the Payment Eligibility Lettersent to the borrowerdated August 19,2015 and it showed a total of 27 qualifying payments. FSA asked PHEAA to review the account

again and provide an updated payment tracker. The updated payment tracker showed a total of24 qualifying payments.

RECOMMENDATION:

� PHEAAmust make the correction immediately and inform the borrower of the adjustment.


� Please provide FSA a copy of the letter to the borrower explaining the adjustment for our recordsby February 29, 2016.

OBSERVATION#5 AUTO PAYMENT ERRORS:

� Sample borrower __is a denied existing account with PHEAA. According to the paymenttracker all of the dates for when qualifying payments were made is off by 1month and caused onepayment to be an ineligiblepayment for due date July 3, 2014. The borrower is on a direct debitpay so the payments should match the due dates and the 30/15 payment rule should not apply tothis account. The borrower should have a total of 18 qualifying payments instead of 17qualifying payments.

RECOMMENDATION:

� FSA requires that PHEAA review and identify other borrowers with like issue accounts that haveauto payment counting errors. PHEAA must evaluate their process and validate that any accountsput through this script to count payments is analyzed accurately.

SERVICER’S RESPONSE:

-----OriginalMessage-----From: __[mailto:__.org]Sent: Tuesday, December 22, 2015 2:30 PMTo: __Cc: __,__,__,__Subject: PSLF Auto Payment Counter Correction

__,

As promised, Iam providing you an update on the system change request relative to the systemicpayment counting issues that hadbeen identified during prior reviews of PHEAA's PSLF processing.This system change now excludes payments made 30 days prior to the due date, non-borrowerpayments,and single payments which satisfied more than a single due date.

As with all change requests,pre-productiontesting was performedto validate that the new systemcode was functioningas intended. As such, the change requestwas placedintoproductionon12/13/2015.

Best Regards,

__Manager____Telephone (__)_Fax (__) __

======================================================================This message contains privileged and confidential informationintendedfor the above addresseesonly. If you receive this messageinerror please delete or destroy this message and/or attachments.

The sender of this message will fully cooperate in the civil and criminalprosecutionof any individualengaging in the unauthorizeduse of this message.


� FSA would likePHEAA to providea corrective action plan, in terms of a clean-up effort, inwriting no later than March 2, 2016. FSA will review the plan and provideany necessaryguidance. Please add this to the FSA Issue Tracker Item as FSA would like to monitor theprogress.

FINAL ANALYSIS:

� There was an error rate of 28% on this review (9/40). FSA would expect PHEAA to have anerror rate of 5% or less when analysis is of PSLFaccounts.

AMERIC

April 28 2016REVIEW REPORTTOPIC : Public Service Loan Forgiveness (PSLF) Program

SERVICER: Pennsylvania Higher Education Assistance Agency (PHEAA)/ Fedloan

ServicingREVIEWER (S ) :

QUARTER REVIEW PERIOD: January 1, 2016 – March , 2016

SAMPLES REVIEW PERIOD: October 1, 2015 December31, 2015

REVIEW OBJECTIVES:





STANDARDS :



loans - - 34 CFR 685. 219

METHODOLOGY

Sampling

The Operations Services selected a sample of 40 accounts from the Public Service LoanForgiveness (PSLF) Program out of a listing of 5000 accounts . Within the 40 sample accounts

we requested the following category : 10 Approved Existing Accounts ; 10 Approved Transfer

Accounts ; 10 Denied New Accounts ; and 10 Denied Existing Accounts .

Terminology

The termsbelow may be referenced in the observation :

Thispresentation, documentor report and analyses are provided Internal-Use Only and may not beshared outside of FederalStudentAid without the permission of FSA -Operations Services. This



Approved Existing Account-- > This is an Employee Certification Form (ECF) that is approved

on the account for the borrower and currently has their loans serviced with PHEAA as well as atleast one approved ECF on file. Since an approved ECF is on file , PHEAA will need to start the


Approved TransferAccount-- > This is where an ECFis approved forthe borrower (borrower

doesnothaveany other ECF s on file) and PHEAA willneed to get the loansand then start the

PSLF tracking. This is a new borrowerand theseaccounts are deemed as " Approved Transfer" .

Denied New Account -- > This is an ECF that has incorrect/missing information and cannotbe

processed . PHEAA more than likely does nothave allthe loans on their system yet and that is

why the borrower is listed as " Denied New " without further PSLF processing until an approved

ECF is on the account. Then PHEAA will need to reach out for all the loans or the restof theloans. But this would be the first ECF the borrower has sent in and it is denied with no other

ECF s on file .

Denied Existing Account - - > This is an ECF that has incorrect /missing information and cannot


least one approved ECF for the borrower , but the PSLF process cannot move along until an

approved ECF is received deeming this borrower as "Denied Existing"

Materials Requested

Werequestedthe followingmaterials from the PHEAA:

Required documents for the Quarter endingDecember 31, 2015 spreadsheet ofrequestedaccounts.

Copies ofborrower s history and activity report (BHAR), and applicable screenshots.tracker for each account.

Copies of Employee CertificationForm (ECF)

Testing

We performed the following tests to meet our review objectives :

Reviewedthe borrower' s historyand activity report, andapplicablescreenshotsto ensure

that the borrower is on an eligible repayment plan, and to validate the date ofmonthlyqualifying payments .Reviewed payment tracker to ensure that the servicer had an accurate number ofqualifying payments .Reviewed the employee certification form to ensure that the borrower is employed fulltime ata qualifying public service organization (s) on the date ofmonthly qualifyingpayments.

OBSERVATION # 1 PAYMENT ( S ) NOTCOUNTED AS A QUALIFYING PAYMENT ( S)- DUE DATE VS. ECF DATE:

Sample borrower an approved transferred accountwith PHEAA. A paymentof $ 285 .26wasmade theborrower on September 15, 2015 for duedate September 12, 2015. According

to the payment tracker PHEAA did not count this paymentas a qualifying paymentdue to

payment wasmade afterdue date; however, the payment wasmadewithin 15days after the duedate . FSA further reviewed theapproved ECF and theend date is September 21, 2015 so the

payment should becounted as a qualified payment for themonth of September.

Sample borrower is a denied existing accountwith PHEAA. The borrowermade2 paymentsthatwere notcounted as qualifying payments in the amountof $ 1, 198. 19 onMay 21, 2015 and

June30, 2015 for due dates May 21, 2015 and June 21, 2015. According to the payment trackerPHEAA incorrectly applied these paymentsto other due dates and resulted in the paymentsto notcount as qualifying payments. The paymentmade on May 21, 2015 was applied to due date June

21, 2015, and the paymentmadeon June 21, 2015 was applied to due date duedate July 21, 2015.

PHEAA stated under reason for due date July 21, 2015 that thepaymentwas made afterECF.

FSA further reviewed the approved ECF and the end date is June 30 , 2015 so the payments

shouldbecounted as qualified payments for themonth ofMay and June.

Sample borrower is an approved existing account with PHEAA. A paymentof $ 13.51was

made by the borroweron September 9 , 2015 for due date September 27 , 2015. According to thepaymenttracker PHEAA did not count this payment as a qualifying paymentbecause the due

date is after theECF end date of September 26 , 2015. PHEAA would send billing statements outto borrowers 20 daysbefore the due date andwould acceptpaymentsmadebefore the due date.

FSA believes that the payment should be counted as a qualified payment for themonth of

September

Sample borrower an approved existing accountwith PHEAA. Theborrowermade a

paymentof $312.53 on September 24, 2015 for due date October 7 2015. According to the

paymenttracker PHEAA did not countthis payment as a qualifyingpayment because the duedate is aftertheECF end date of September 25 , 2015. FSA believes that the paymentshould be

counted as a qualified paymentfor themonth ofSeptember.

RECOMMENDATION :

would need to review and identify other borrowers with like issue accounts where thequalified paymentwas countedbased on the due date and not by the start and end date of the

qualifying employment(ECF). Please provideFSA the resultsofthe query and also add this to

FSA Issue Tracker Item .

RESPONSE FROM POLICY AND OFFICE OFGENERAL COUNSEL :

Forthis concern, Program Managementreached outto the Office ofGeneralCounsel (OGC) for

additionalguidance. OGC respondedback that thesetypesofpayments should count for PSLF.

Based on the requirements, ascurrentlywritten, to qualify for PSLF, the borrowermustmake 120

separate on- timemonthly paymentson an eligibleloan and be employed full- timeby a publicservice organization at the timetheymake the 120 payments. Further in our Q & A ' s on PSLF

( # 13and 15

common- questions.pdf > ) FSA also ties the requirement below for qualifying employment to

when the paymentwas made, not to the period for which the paymentapplies.

REQUIREMENTS :

205.01 The PSLF servicer shall determine if the qualifying payments were madewhile in

qualifying employmentCounteach month from the StartDate to EndDate (Section 3Item 2a of ECF), for which a qualifyingpaymentwasmade.

Forthefirstmonth, theactualpaymentdate mustbeon

after the StartDate. For thelastmonth, theactualpaymentdatemustbebeforethe End Datelastmonth of each

EmploymentCertification. For Part-timeemployees, theseconditions apply to each employer.

ii. For partialpayments made, the actualpayment date is the

date on which the total of partial payments equals to or is

greater than the full scheduled paymentdue amount for thatmonth .

. The scheduled payment date will determine the calendar

month for which the qualifying payment is counted .

Example: Scheduledpaymentdate is July 1butactualpaymentdate is June 29.

Assumingtheborrowerdoesnothave previousdelinquencies, the qualifyingpaymentappliesto July .

204. 03 Borrowersmustmake 120 separate on- time qualifying payments after October 1,

2007 to beeligible for the Public Service Loan Forgiveness Program .

. All 120 paymentsmustbemade afterOctober 1, 2007 tobeeligible for

the Public Service Loan Forgiveness Program .

For the Public Service Loan Forgiveness Program , payments shallbe

considered on -time when they are received no later than 15 days after the scheduled

payment date.

the Public Service Loan ForgivenessProgram , a qualifyingpaymentmust satisfy the full current payment due amount for thatmonth .

iv Borrower prepayments (payment amounts equal to or more than one

full monthly payment amount ) shall only count as one on -time paymentwhen

tracking for qualifying payments for the Public Service Loan Forgiveness Program .

CORRECTIVEACTIONPLAN

PHEAA mustmake the correction immediately and inform theborrowersof theadjustments.

Please provideFSA a copy of the letters to the borrowers and any updated paymenttrackers forour recordsby May 5 , 2016. FSA asked PHEAA during the quartermonitoringreview to

evaluate their process to ensure that qualifying payments are counted correctly based on therequirements above and supply FSA with a corrective action plan, in terms of a clean-up effort in

writingno later thanMarch 2 , 2016 . FSA did notreceive any information in writing and wouldlike PHEAA to providea plan in writingby May 12 2016 . FSA will review theplan and

provideany necessary guidance.

OBSERVATION # 2 PAYMENT( S ) NOT COUNTED AS A QUALIFYING PAYMENT(S )

Sampleborrower is a denied existing accountwith PHEAA. The paymenttracker showed

that the approved ECF dates were from August 15, 2005 to October 13, 2015. FSA furtherreviewed the paymenttracker and it showed that a paymentmadeon November 20, 2014 was not

counted as a qualifying payment fordue date December 7 , 2014. FSA believes that the payment

should be counted as a qualified payment for themonth of December.

Sample borrower an approved existing accountwith PHEAA. FSA reviewed the

borrower' s paymenttracker and it showed that the approved ECF dates were from June 12 , 2006to October 5 , 2015 . FSA further reviewed thepaymenttracker and itshowed that a payment

made on March 28, 2014 wasnot counted as a qualifying paymentfor due date March 28 , 2014.FSA believes that the payment should be counted as a qualified payment for themonth ofMarch .

Sample borrower is a denied existing accountwith PHEAA. The paymenttracker showedthat the approved ECF dates were from November 10, 2010 to September 9 , 2015 . According to

the paymenttracker PHEAA missed qualifyingpayments that the borrowermade in the amount

of $ 27. 21for due dates December 7 , 2013 and December 7 , 2014. FSA believes that the

payments should be counted as qualified payments for themonth of December 2013 and 2014 .

OBSERVATION # 3 MANUAL REVIEW ERRORS:

Sampleborrower an approved existing accountwith PHEAA. The borrower submitted an

approved ECF with dates from January 29 2012 to August 29, 2105. FSA reviewed the paymenttracker and it showed that PHEAA counted qualifying payments for a paymentmade on

September 9 , 2015; September 28 , 2015 ; November 6 , 2015 ; December 7 , 2015 ; andDecember

30, 2015. The payments cannot countuntilthe borrower submits a new ECF.

Sampleborrower is a denied new accountwith PHEAA. PHEAA received an approved ECFwith datesMarch 18, 2014 to October 15 , 2015; however, the approval ECF letter showed a begin

date certified as September 12, 2015. FSA further reviewed the payment tracker and itshowedthat the borrowermadepayments from January 26 , 2015 to December 10, 2015 and only one

paymentwas shown as a qualifying paymentwhen the borrowermade a payment on September3 , 2015. Based on the approved ECF, paymentsmade from January 26 , 2015 to October 15, 2015

should be counted as qualifyingpayments.

borrower is an approved transferred accountwith PHEAA. The borrower is on a

standard repaymentplan with a repaymentterm of 120 paymentsand thebegin date is February6 , 2014. FSA further reviewed the ECF the borrower submitted with approved dates from

September 1, 2013 to October 19, 2015. The payment tracker showed that the PHEAA did notcountthis repayment plan as an eligible plan and thepayments were notcounted as qualifying

payments from February 6 , 2014 to June6 , 2014 and November5, 2014 to October 5 , 2015.

RECOMMENDATION FOR OBSERVATION # 2 AND OBSERVATION # 3 :

must retrain staff on how to manually review the qualifying payments correctly.

CORRECTIVE ACTION PLAN FOR OBSERVATION # 2 AND OBERVATION # 3 :

mustmakethe correction immediatelyand inform each borrowerof the adjustment(s) .Please provide FSA a copy of the letters to the borrowers and an updated paymenttracker for our

recordsbyMay 5 , 2016 . PHEAAmust provide a plan to retrain staff that processes the manual

reviewsof qualifying payments. FSA would likePHEAA to provide a corrective action plan inwriting byMay 12, 2016 to prevent future errors of this type .

OBSERVATION # 4 APPROVED PAYMENT( S ) WHILE ON A FORBEARANCE:

borrower is a denied existing accountwith PHEAA. The borrower is on an income

driven repayment plan with a $ 0 paymentwith a begin date ofMarch 7 , 2014. PHEAA received

an ECF with approved dates from August 20 , 2014 to April 16 , 2015. The payment trackershowed that the borrowerwas on a forbearance from March 7 , 2015 to April 16 , 2015. PHEAA

didnot request the forbearance to be removed so the $ 0 paymentcan countas a qualifying

paymentforMarch, and April.

RECOMMENDATION:

FSA authorizesPHEAA to removethe forbearance from March 7 , 2015 to April 16 , 2015

to allow $ 0 paymentscountas qualifyingpaymentsfor themonth ofMarch and April.

REQUIREMENTS:

204.08 The PSLF servicer shall have the ability to override payments, per FSAauthorization and on an exception basis, to make them qualifying ornot qualifying payments for the Public Service Loan ForgivenessProgram. The PSLF servicer shall note the FSA-authorized conditionon the borrower account.


FSA would like PHEAA to make the correction immediately and inform the borrower of theadjustment. Please provide FSA a copy of the letter to the borrower and an updated paymenttracker for our records by May 5, 2016.

FINAL ANALYSIS:

� There was an error rate of 28% on this review (11/40). FSA would expect PHEAA to have anerror rate of 5% or less when analysis is of PSLF accounts.

Documents

EDUC SPARTM - The New York Times · 2019. 11. 21. · MENTOR EDUC SPARTM OFAMERIC October 19 2015 REVIEW REPORT: PublicService Loan Forgiveness (PSLF) Program SERVICER: Pennsylvania