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Transitioning to Direct Loans
Pending Legislation
Student Aid and Fiscal Responsibility Act – HR 3221 Passed the House of Representatives 9/17/2009
Mandatory Pell Grant funding100% Direct Loans July 1, 2009 and forward
Expand/modify Perkins Loan Program
Where are we now…
Transition Planning and ActivitiesDeveloped Customer Support plan
for the transition that includes support for all phases of transitioning
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Where are we now…
COD System capacity enhancements for 100% FFELP volume in progress, on time and on taget
FSA Customer Service Centers Increased and trained staffMonitor incoming volumeCOD has dedicated OnBoarding Team to
assist setup completion requests and “starts”
Where are we now…
Other FSA systems gearing upmyDirectLoan eMPN websiteNSLDSG5
Where are we now…
Teams designed for targeted support Graduate/ProfessionalSmall schoolsCareer CollegesCommunity CollegesHBCU, HSI, and Tribally controlled collegesForeign schoolsPacific Island Schools
Where are we now…
Selected 4 additional Servicers Great Lakes Educational Loan
ServicesNelNetSallie MaeAES PHEAA
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Where are we now…
TrainingSpring and Summer “new school” DL
trainingDirect Loan processing with EdExpressBusiness OfficersForeign SchoolsExtensive new suite of DL training
Up to 4x per month after January
Where YOU Are Now…
FSA made benign changes to most school profiles
FSA made benign changes to most TG mailboxes
Does NOT obligate school to process Direct Loans
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Where YOU Are Now…
What do you do next to be preparedwww.direct.ed.gov/participating.html
Complete setup [email protected]
Request completion of FSA setup800/848-0978
[email protected] Transition Team
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…to make you comfortable and hopefully not blue…
Something old, something new…
The sameVirtually all of the regulations
Origination/Certification
Loan type and interest*
MPN
Counseling
*FFELP PLUS 8.5%, D/L PLUS 7.9%
Differences
Disbursement
Origination Fee/Upfront rebate
Reconciliation
Monthly
Differences
Cash
Direct Loan schools calculate and draw immediate need
Single source – G5
Direct Loan Code
Main Campus/Additional Location
What’s New?Beginning in March 2010, the eMPN
website will become the myDirectLoan website.
The myDirectLoan website will continue to allow users to:
Complete an electronic promissory noteView and print electronic disclosure statements
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What’s New?
Beginning in March 2010, the myDirectLoan website will be enhanced to:
Allow Parents and Graduate Students to complete a PLUS Application
Allow Direct Loan borrowers to complete Entrance Counseling
Allow endorsers to endorse a PLUS Loan electronically
Allow borrowers to electronically appeal credit check decisions during the application process
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Voila!
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myDirectLoan log in
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PLUS Process- New Features
Save all Parent/Student relationships to reduce re-entry in subsequent Award Years
Parents are able to submit multiple students and schools during a single application process
Allow Parents to resubmit applications for subsequent Award Years
Send electronic notifications to all schools included in a completed PLUS loan application
Streamline the Application/Promissory Note Process
Parent/Student Identifier and School information submitted in the PLUS loan application will be pre-populated on all applicable promissory notes
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6 New DL School Options
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• Default values will be populated in the School Options fields• The new options are not award year specific• Default values for the one time update are listed below:
Field Name Valid Values Displayed on the Web
One Time Update Entries:
Participate in Electronic Parent PLUS Application Yes or No Yes
Participate in Electronic Parent PLUS Application Begin Date
MM/DD/YYYY 05/01/2010
Parent PLUS Application Response Option Daily or On Demand Daily
Participate in Electronic Grad PLUS Application Yes or No Yes
Grad PLUS Application Response Option MM/DD/YYYY 05/01/2010
Participate in Electronic Grad PLUS Application Begin Date
Daily or On Demand Daily
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Entrance Counseling
The “What You Need” section of the myDirectLoan homepage provides users a guide for Entrance Counseling
Information on Entrance Counseling and a link to the PIN site is provided
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Direct Loan Processing Cycle
Originate
Similar to Grants/FFELPConfirm eligibilityDetermine award/loan amountCreate award
School transmits award/loan origination data to CODVia Common Record and same
transmission as Pell Grant data
OriginatePLUS loan requires credit check
Systemic check via Loan Origination submission
School check via COD websiteOr after March 27, 2010… borrower
initiateDenial Packet
Explanation for denial/appeal processPre-filled endorser formMaterials to submit endorser form
Direct Loan Processing Cycle
Disbursements
Advanced Funded SchoolsCalculate immediate needDraw funds from same source as other
Title IV award funds - G5Flexibility to avoid excess cash
Remember Cash Management RulesMust submit data within 30 days of eventActual Disbursement Data substantiates drawn
fundsALWAYS submit actual date
Master Promissory Note
One lender, one MPNNo linked MPN no disbursement Paper or electronicAll MPNs 10-year active
Provides borrower mobilitySchool selected options
COD School Options screenCOD prints paper note options
Booked loan
A “Booked” Loan is a GOOD thing…Accepted Origination record, MPN
and 1st actual disbursementIs now a binding obligation between
borrower and ED30-Day Warning Report
ID’s unbooked loans for school
Reconciliation
Monthly basisSchool reconciles internally
Financial aid office/business officeSchool reconciles externally
COD/G5School Account Statement (SAS)Know where the money isCOD Reconciliation Specialists
Direct Loan Processing Cycle
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School Services Online
School Services
Slide 33
Default/Delinquency ManagementPre-Repayment Counseling
Calls begin two months prior to repayment
Emails to assist with repayment optionsDelinquency Counseling
Calls begin at 31 days (22 calls) Letters begin at 7 days delinquent (12)
Call campaigns ($80k plus)Late Stage Delinquency
DL.ed.gov (current servicer)
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Borrower ServicesRepayment options tailored to individual need
Standard, Graduated, & Extended
Income Based Repayment Plan
Income Contingent Repayment Plan*
Alternative Repayment Plan*
Public Service Loan Forgiveness*
*Unique to Direct Loan Program
Borrower Services
Date due flexibility for all repayment plans
Electronic billing/payments EDA and on-line payment optionsSelf-Service tools for borrowers
Borrower Services
Repayment incentivesOnline form submission with electronic signatureForbearance/Deferment
Some Things To Consider…
ITStaffStaff
Staff
FSA Support
StaffStaffIT
IT
Reconciliation
Resources
Tools
Tools
Tools
IT
ITStaff
Staff
Resources
Resources
FSA Support
FSA Support
Reconciliation
Reconciliation
Some Things To Consider…Commonality with Grants
Same person
Same origination process
Same disbursement process
Same transmission vehicle
Some things to consider…
Resources/StaffCommonality of awardsSame system (COD)Same institution solution
Work with your software provider to understand the DL process and fields
Some things to consider…
COD staff resources for assistanceCOD Customer Service
RepresentativesCOD Issue Resolution SpecialistsCOD Reconciliation Specialists
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Questions and Comments
E-mail contact for more information...
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Questions and Comments
