Student Loan Management System(LMS) RFQ Texas Higher Education Coordinating Board Agency Operations Committee, October 2014

Summary 2 Current software fee is based on portfolio size Projected software costs for FY 2016 = $1.3M Current software is older technology Current software provides limited litigation support Agency issued an RFQ

Selected Vendor - Nelnet Student loan specific software Produces ~$600K annual savings with a flat annual fee Provides enhanced functionality Improved technology, security & software interfaces Lowest conversion and operational risk Enhancing litigation functionality 3

Supplemental Information 4

LMS – Current State 5 Contract with current provider expires 8/31/2017 Current license fee is based on portfolio size - flat base fee and 5 basis points on the part of the loan portfolio that is over $850M Loan portfolio size $1.2B with projected costs for FY 2015 = $1.3M Current software is older technology: COBOL based, no Windows interface for users, no mobile option, limited reporting features Current software provides limited support of litigation and post- judgment collections activities

RFQ Process RFO issued October 23, 2013 (per July 2013 Board request) 9 member committee was formed. Included representatives of key loan support areas, Loan Program Operations (LPO), OAG Collections, ISS & Financial Services Established 210 scoring criteria within 21 key categories 8 responses received met the RFQ criteria, 2 full software, 3 outsource, 3 litigation only software Highest scoring vendors demonstrated software on-site Recommendation was made by the committee 6

Scoring Categories 7 Technical Requirements 1.0General Functionality 2.0Loan Origination 3.0Account Servicing 4.0Skip Tracing 5.0Litigation Management 6.0Litigation and Default Collection 7.0Post Judgment Collections 8.0Accounting 9.0Interfaces 10.0Web Access for Borrowers an Cosigners 11.0Web Access for Schools/Institutions 12.0Web Access for Internal Staff 13.0System Security, Backup/Recovery 14.0Customer Service, Service Level Agreements/Response Times 15.0Data Conversion and Migration from Helms 16.0Solution Requirements - Servers, DB Platform, Etc. 17.0Installation/Implementation 18.0Training and Documentation 19.0Firm Information - Background, References/Staff 20.0Proposed Cost Fees 21.0Billing Invoicing - Contract Term, Extensions

Outsourcing Higher operational cost Per transaction fees: Cost increases with volume (# loans, phone calls, payments, letters, etc.) Locations were outside the state of Texas 8

Committee Members - Experience Cheryl Bellesen (Manager, OAG Collections Division) – 29.5 years working with student loans Katherne Carson (Research & Reporting Officer) – 30 years working with student loans John House (Agency Information Security Officer) – 10 years, THECB student loan system security Patrick Krishock (Senior Financial Analyst) - 8 years working with Coordinating Board student loan bond issues and debt administration Heidi Langdon (Director Application Development & Support)- 16 years gathering technical requirements, building custom web systems, evaluating web tools/products/software and implementing online solutions. Certified Project Manager; first became acquainted with the HELMS in

Committee Members – Experience (cont’d) Ken Martin (Interim Assistant Commissioner, Financial Services) - 21 years of accounting experience, with 5 years of student loan accounting, state accounting processes and requirements Janie Miramontes (Director, Client Services, Loan Program Operations) - 34 years working with THECB student loans Shelley Zent (Business Relationship Manager) - over 16 years of experience in management consulting and IT portfolio/project management including business & system requirements, developing evaluation scoring criteria, vendor evaluations, vendor deliverable management & service level objectives, including custom and off-the-shelf application implementations for Fortune companies Dan Weaver (Former Asst Commissioner Business Services). 8 years student loan management experience (Participated through 4/30/14) Average experience per member: 16 years 10