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Cynthia Battle | Dec. 2014 U.S. Department of Education Student Loan Servicing Summit Special Programs.

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Presentation on theme: "Cynthia Battle | Dec. 2014 U.S. Department of Education Student Loan Servicing Summit Special Programs."— Presentation transcript:

1 Cynthia Battle | Dec U.S. Department of Education Student Loan Servicing Summit Special Programs

2  Total and Permanent Disability (TPD)  TEACH Grant  Public Service Loan Forgiveness (PSLF)  Open Forum (TPD, TEACH, and PSLF)  Direct Loan Consolidation  Open Forum (Consolidation) Session Format 2

3 TPD – Major “Shift” Historically, TPD processing was one of the major categories of customer service issues tracked by the Ombudsman office. Over the past few years, there was a substantial shift in the operational process resulting in significant decline in customer issues. Research cases for TPD declined by 34.3 percent in FY14 when compared with the prior year. 3

4 TPD – Major “Shift” Factors that contributed to the decline in TPD cases and process improvements:  New regulations effective July 1, 2013, allowed borrowers seeking TPD discharge to apply with a single application directly to FSA  A streamlined application process for some recipients of disability benefits through the SSA  Improved process for TPD with focus on customer service  Redesign and informative web pages which includes online application process  Dedicated call center where our servicer worked to reduce the barriers to TPD application and assist borrowers and their physicians in navigating the application process 4

5 Key Projects and Planned Improvements for  Continue improving customer experience  Decrease TPD application processing time  Evaluate reinstatement process  Borrower communication improvements  Industry education on TPD process 5

6 TEACH Program Implementation at FedLoan Servicing July 2013 Implementation All new TEACH Grants began disbursing directly to FedLoan August 2013 Implementation All existing TEACH Grants transferred to FedLoan Servicing 6

7 Portfolio Overview Volume TypeTotal Unique TEACH Grant Recipients73,869 TEACH Grants144,060 TEACH Grant Volumes as of September

8 Portfolio Overview as of September

9 Portfolio Overview TEACH Grant Service Obligations 9

10 Key Concerns & Issues 2014 Recipient Concerns - Program Confusion  Misunderstanding Agreement-to-Serve  Importance of Certification Response Recipient Responsibilities (Demographics) Withdrawn Recipient Requirements No New Grant Responsibilities 10

11 Program Challenges Reasons for Conversion 1. Recipient Requested – Voluntary (17%) 2. Withdrawn Recipient – No response to initial certification requests 3. Withdrawn Recipient – Ineligible response to first annual certification requests (unique to withdrawn recipient) 4. No response (Both Graduated and Withdrawn) 5. Mathematically unable to fulfil obligation Recipient Request No Time To Cert 64 Cannot Meet Due To No Time Left To Cert 79 Recipient Request Not In Qualified Teach Field 451 Recipient Request Other 601 Recipient Request Does Not Intend To Teach 679 Did Not Certify Intent Or Annual Certification 11,621 11

12 Program Challenges - Schools Separation Date Processing Obligation begins with separation Differences with Direct Loans Withdrawn recipients Graduated recipients Inactivating enrollment or separation periods 12

13 Key TEACH Grant Efforts & Improvements 13 1FedLoan Servicing utilized Pennsylvania State Grant specialists to service program 2Specialists have intimate Grant-to-loan program knowledge and expertise 3Creation of TEACH Certification forms (Certification, Suspension, Conversions) to simplify program complexity and challenges 4Online TEACH Web Products & Services for grant recipients 5Expanded Quality Assurance on Grant-to-Loan Conversion Review 6Recipient Behavior Analytics - No New Grant Scenario - Withdrawn/Reenrolled Scenarios

14 The Public Service Loan Forgiveness Program (PSLF) allows eligible borrowers to cancel the remaining balance of their Direct Loans after serving full-time at a public service organization for at least 10 years while making 120 qualifying monthly payments after October 1,

15 PSLF – Qualifying Payments Qualifying payments Must make 120 separate, monthly payments After October 1, 2007 Do not need to be consecutive Must be for full amount due under plan Must be made with 15 days of due date 15

16 PSLF – Qualifying Repayment Plan Income-driven plans are most likely to leave a remaining balance for forgiveness after 120 qualifying payments 10-Year StandardIBRICRPay As You EarnOthers >= 10-Year Standard 16

17 Qualifying Payment Eligibility - Repayment Plan Breakdown 8 17

18 Quarterly Repayment Plan Evaluations  Communicate to borrowers on 10-year Standard payment plans that they will not benefit from PSLF  Communicate to borrowers not on an eligible repayment plan that they are not making qualifying payments Qualifying Payment Eligibility 18

19 Specialized processing and PSLF counselors Unique 800# for PSLF inquiries Intelligent call routing for the primary 800# Qualifying Payment Eligibility - PSLF Customer Support 19

20 Qualifying Payment Eligibility - PSLF Escalated Issues PSLF Issues  Number of Qualifying Payments  Ineligible Repayment Plan  Qualifying Employment Concerns  Consolidation & Loss of Qualifying Payments  Borrower Confusion PSLF is 2.2% of FedLoan Servicing’s portfolio, but accounts for 19% of escalated issues 20

21 Program Visibility - ECF Processing 17 21

22 Program Visibility - Qualifying Employment Types* *Employers with approved ECFs 22

23 Consolidation & PSLF 132,321 Consolidation Applications*with ‘PSLF Interest’  Borrowers note PSLF interest on 23.4% ** of all Direct Loan Consolidation Applications  Noted interest gives FedLoan unique PSLF counseling opportunities that did not exist until 2014 Direct Loan counseling Repayment Plan counseling Employment Certification Form counseling *As of 10/20/2014 ** Comparison based on 564, 397 total Consolidation Applications as of 10/20/

24 Planned Target Areas in 2015  Increased Visibility and Outreach  Communication Improvements o More specificity in ECF denial letters o Revise content on our web products to be more borrower friendly and take account of what we have learned about PSLF borrower behaviors 24

25 TPD, TEACH, and PSLF Let’s talk… Open Forum 25

26 26 Direct Loan Consolidation  Direct Loan Consolidation  Program Update  Open Forum 26

27  Borrowers with federal student loans can:  Submit applications electronically  Confirm loans for consolidation  Choose a consolidation servicer  Select a repayment plan and submit an Income- Driven Repayment e-application if desired “New” Loan Consolidation Available on StudentLoans.gov 27

28 New Direct Consolidation Loan Process  With the implementation of our new Direct Loan Consolidation process, we have four consolidation servicers:  Through the completion of the Federal Direct Consolidation Loan Application and Promissory Note, a borrower will confirm the loans that they want to consolidate and agree to repay the new Direct Consolidation Loan  The electronic application on StudentLoans.gov consist of five steps: 1.Choose Loans & Servicer 2.Repayment Plan Selection 3.Terms & Conditions 4.Borrower & Reference Information 5.Review & Sign FedLoan / PHEAAGreat Lakes NelnetNavient (formerly Sallie Mae) 28 Focus on these steps

29 Key features of the electronic application:  NSLDS lookup performed and information about an applicant’s federal education loans will populate the application  Ability to delay processing of the application if applicant has at least one loan still in grace  Option to choose the federal servicer to complete the consolidation  Ability to select a repayment plan for the consolidation loan. Applicants interested in one of the income-driven repayment plans will be able to complete the electronic request process New Direct Consolidation Loan Process 29

30 Challenges… Issues… Problems  XML Data Limitation Issue  Partial Loan Display  No Loan Display  Standardization of LVC and payment manifests process  Conversion to ACH vs Paper Checks  Third Party Firms Promising Debt Relief 30

31 Important to Mention… Third Party Firms Promising Debt Relief:  The emergence of companies using sophisticated marketing tactics targeting student loan borrowers, their parents, service members and their families with promises of easy and instant relief from student loan debt has become a concern for FSA  Some companies promise assistance with loan consolidations and application for repayment plans designed to help manage the student loan debt—all services available from FSA and loan servicers at no charge to the borrower  Reports indicate some companies are collecting personal information, personal identification numbers, and Power of Attorney forms from the borrowers that allow the company to manage the borrowers’ accounts  FSA (through the Ombudsman’s office) is working to use the Web, social media, and other communication channels to make borrowers aware that free assistance is available from their loan servicers, and there is no need to pay any fees, much less exorbitant fees to private companies for assistance  We are continuing to explore what additional steps can be taken to help ensure borrowers are not exploited 31

32 Planned Target Areas in 2015  Solution to resolve XML Data Limitation Issue  Consistency of process for LVC  Processing times  Communication Improvements o Make clearer to Perkins borrowers of the potential loss of benefits if consolidating Perkins loans o Choice of Servicer – help borrowers with information in order to make selection 32

33 Open Forum Let’s talk… Consolidation 33

34 34 Cynthia Battle Direct Loan Servicing


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