Direct Loan Process Training for New Participants

Benefits to Schools Funds obtained from a single source Integrated with other school financial processes Schools have control over: –Handling of Promissory Notes –Timing and amount of disbursements –Handling adjustments, refunds, and cancellations

3 What are the Loans? Stafford Subsidized Stafford Unsubsidized PLUS Grad PLUS Consolidation TEACH Conversion to Unsub

4 What are the Interest Rates? First Disbursement of a DL Subsidized loan for Undergraduate borrowers: Interest rate on the unpaid balance Made on or after And Made before July 1, 2009July 1, % July 1, 2010July 1, % July 1, 2011July 1, %

5 What are the Interest Rates? Direct Subsidized Loans for Grad students: –6.8% fixed interest rate Direct Unsubsidized Stafford Loans: –6.8% fixed interest rate Direct PLUS and Grad PLUS: –7.9% fixed interest rate

6 Fees to Borrower For Sub/Unsub loans first disbursed –on/after 7/1/2009 and before 7/1/ % with an upfront interest rebate of 1.0% –on/after 7/1/2010 and before 7/1/ % with an upfront interest rebate of 0.5% Plus fees remain 4.0% with an upfront interest rebate of 1.5%

7 What Are the Benefits for Borrowers? Up Front Interest Rebate –Increases net amount to borrower –To retain, must make initial 12 required payments timely Electronic Debit Account incentive –.25% interest reduction to use EDA for repayment

8 Cod.ed.gov

9 Looking for More Information?

Quick Reference Guide 10

Quick Reference Guide, continued 11

Originate Disburse Servicing Direct Loan Processing Cycle

13 Originate Loan School confirms eligibility, determines loan award and creates student record School Originates a Direct Loan when it creates Direct Loan Award and Disbursement data on its system (equal to certifying a loan in FFEL terminology) School then sends this origination and disbursement data to the COD system School uses batch record process or COD Web site to create records

21 characters S10G The Direct Loan Award ID Social Security Number Direct Loan School code Loan Type Sub, Unsub, Plus Award year Trailing (0910) Sequence # of loan at this school for this borrower during award year

15 PLUS Loan Origination Includes credit check –GRAD PLUS borrower must complete FAFSA –PLUS MPN includes authorization for credit check by COD –Preliminary Credit check can be initiated by school at COD website, with signed authorization Denials can be overridden with a credit worthy Endorser or successful appeal through COD applicant services

Credit Check Decision

17 Electronic MPN –School sets up profile –Specify capability to file eMPN before origination –School specific message –May use eMPN from another school E - Master Promissory Note

eMPN Simulations IFAP/tools for Schools COD CBT –Completing a Sub/Unsub –Completing a Grad PLUS –Completing a Parent Plus

19 Dlenote.ed.gov

20 Paper Master Promissory Note School print vs COD print options –COD prints MPN and sends to school or to borrower –School sends blank MPN to borrower –School sends MPN with preprinted data to borrower –School prints MPN to ED specifications and provides to borrower In all cases paper Promissory notes are sent to the loan processor either by borrower or school –0910 COD Technical reference page II-1-116

COD-Promissory Note Search

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 note  View and print electronic disclosure statements 22

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 23

Voila! 24

myDirectLoan log in 25

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 26

6 New DL School Options 27 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 NameValid Values Displayed on the Web One Time Update Entries: Participate in Electronic Parent PLUS ApplicationYes or NoYes Participate in Electronic Parent PLUS Application Begin Date MM/DD/YYYY05/01/2010 Parent PLUS Application Response OptionDaily or On DemandDaily Participate in Electronic Grad PLUS ApplicationYes or NoYes Grad PLUS Application Response OptionMM/DD/YYYY05/01/2010 Participate in Electronic Grad PLUS Application Begin Date Daily or On DemandDaily

Originate Disburse Servicing Direct Loan Processing Cycle

29 Funding and Disbursements Advance funding: –School draws funds from G5 based on their own calculation of immediate need –Normal cash management rules apply –Report disbursements to COD within 30 days –Disbursements can be submitted up to 7 calendar days prior to the actual disbursement date

Funding and Disbursements Schools use G5 System to –View current funding information –Request payments and adjust drawdowns –Return cash P268K –P268K –10 (trailing year) –1234 (Gaps ID)

31 Funding and Disbursements Accepted actual disbursements at COD: –Result in Current Funding Level (CFL) increase for Advance Funded schools COD screens provide 24/7 view of current funding and disbursement status

32 Funding and Disbursements “Booked” Loan: –Accepted Origination record –Accepted signed MPN –Accepted Actual Disbursement –Is now a binding obligation between borrower and ED 30-Day Warning Report –ID’s unbooked loans for school

Cod Technical Reference (software and technical ref)

34 Reconcile Monthly basis –School reconciles internally, FAA and Business offices –School reconciles externally with COD Aids to Reconciliation: –School Account Statement (From COD) –Direct Loan Tools Software (FSA Download site) –COD screens and reports –COD Reconciliation specialists

School Summary Information 35 Lucy Loo (222) Amy Ang (222) Chris Car (222)

Accessing DL Reports Online

Services: Direct Loan Newsbox DL

30 Day Warning

School Account Statement Cash Summary Cash Detail Loan Detail Disbursement Detail All either monthly and/or YTD

40 SAS Cash Summary Do the totals match school records?

SAS Disb Detail 41 Match School Records? Missing Data?

School: Summary Financial 42

Originate Disburse Servicing Direct Loan Processing Cycle

Servicing  Servicing “Today” - one Direct Loan Servicer  Direct Loan Servicing – Borrower Services  Direct Loan Servicing – School Services School Reports Delinquency & Default Prevention  Servicing “Tomorrow” - multiple Servicers  A Changing Landscape in FSA  Additional Servicers Default Aversion 44

Direct Loan Servicing Web sites For Borrowers - Real Time Account Information Online Transaction Processing - Borrower Self-Service Online Counseling and Rules Based Messaging Interactive Pre-qualifier for Deferment and Forbearance Requests including online submission Online payments Electronic Mail Services EDA Enrollment Online Calculators Online Surveys For Schools - Student Account Lookup Online Reports – Portfolio, Delinquency and Counseling Complete Question Center For Borrowers - Real Time Account Information Online Transaction Processing - Borrower Self-Service Online Counseling and Rules Based Messaging Interactive Pre-qualifier for Deferment and Forbearance Requests including online submission Online payments Electronic Mail Services EDA Enrollment Online Calculators Online Surveys For Schools - Student Account Lookup Online Reports – Portfolio, Delinquency and Counseling Complete Question Center 45

Additional Servicers  Created an environment of competition to ensure student borrowers received best in business service  Selected Additional Federal Loan Servicers ACS (current servicer) Great Lakes Education Loan Services (additional) Nelnet (additional) Sallie Mae Corporation (additional) AES / PHEAA (additional) 46

Approach: All borrower federally held loans will be maintained by a single servicer Servicers must comply with all legislative and regulatory requirements and will provide unique best in business services Schools will be working with multiple servicers Examples of Services: Single Point of Contact for Schools per Servicer Financial literacy materials and web tools Predictive call modeling (for delinquency) Robust skip tracing tools (for delinquency) Web Chat 47

What does all this mean for schools? Will schools have to work with multiple servicers? Will schools likely have different reporting formats for various school reports ? Can a school designate which servicer they want? How will a school know which servicer has a borrowers loans? Yes, schools will work with all servicers. Yes, schools will likely have different reporting from each servicer. No, schools cannot designate a servicer. Schools will use NSLDS to determine which servicer has borrower loans. 48

Implementation Timeline Three-Phase Implementation –Phase 1 (Initial) – COMPLETE –Phase 2 (Intermediate) – 3/31/10 Completion Date –Phase 3 (Final) – 8/31/10 Completion Timeline: August 31, 2009: (Phase 1) - COMPLETE Additional Servicers fully operational to handle loan sales for Department March 31, 2010: (Phase 2) July 15, 2010: Allocations of new borrower loan volume will be determined (per servicer) August 31, 2010: (Phase 3) Additional Servicers fully operational to handle William D. Ford Direct Loans 49

Get to know your Federal Loan Servicers: 50 FedLoan Servicing (PHEAA) NSLDS Servicer Code: NSLDS Name: Dept of ED/ FedLoan Servicing (PHEAA) Borrower Phone: Web: School Phone: Web: Great Lakes Educational Loan Services NSLDS Servicer Code: NSLDS Name: Dept of ED/ Great Lakes Borrower Phone: Web: School Phone: Web:

Get to know your Federal Loan Servicers: 51 Nelnet NSLDS Servicer Code: NSLDS Name: Dept of ED / Nelnet Borrower Phone: Web: School Phone: Web: Sallie Mae NSLDS Servicer Code: NSLDS Name: Dept of ED / Sallie Mae Borrower Phone: Web: School Phone: Web:

52 FSA Exit Counseling New site for FSA Exit Counseling Integrated into –Current student site for aid detail –Student uses PIN to access Coordinating to use same terminology as Entrance Counseling Coming in Spring 2010

53 FSA Exit Counseling NSLDS will provide student with current loan data Calculators for various repayment types will be provided Link provided to loan holder site (where available) to facilitate communication Available in both English and Spanish

54 Student Access:

55 Benefits of FSA Exit Counseling Evidence of completion will be sent to Federal Loan Servicers, Direct Loan Servicer, and GAs NSLDS will be able to upload/store completion records when school uses another product Allows comprehensive tracking to be included in reports FSA Exit Counseling product will change with any compliance or regulatory requirements

56 How to Get Started in DL  What do you do next to be prepared  Complete setup information  Request completion of FSA setup 800/  FSA Transition Team

57 General Federal Student Aid Information COD School Relations-Applicant Services (800) Direct Loan Servicing Center – Borrower Services Direct Loan Consolidation Center Federal Student Aid Ombudsman Direct Loan Information Call Center Contacts for Borrowers

58 Direct Loan Website

59 Call Center Contacts for Schools COD School Relations Center (800) School Services – Direct Loan Servicing (888) Direct Loan Consolidation Center (800)

60 Direct Loan Resources  Written Materials (IFAP)  34 CFR 685  Direct Loan School Guide  COD Technical Reference  Direct Loan Bulletins  National Direct Student Loan Coalition –

Direct Loan Training  Suite of Direct Loan webinars this Fall began in October, updated Spring 2010  COD Systems Primer  Direct Loan program Primer  COD & Direct Loan Program  Reconciliation

Direct Loan Training, continued  Suite of Direct Loan webinars this Fall and updated Spring of 2010  Reports  D/L Tools  Direct Loan Servicing  EdExpress for Direct Loans

Fall Conference Recorded and Posted  Direct Loan sessions Direct Loan Processing in COD for new Participants Direct Loan Processing for those new to COD and new to Direct Loans Direct Loan Programmatic and Systems Primers What’s new in COD for Direct Loans Direct Loan COD Hands On Direct Loan Funding and Cash Management Direct Loan Reconciliation Direct Loan Reports Direct Loan Tools Direct Loan Servicing

64 Questions and Comments