IN CONCERT ILLINOIS ASSOCIATION OF STUDENT FINANCIAL AID ADMINISTRATORS ANNUAL CONFERENCE April 8 – 10, 2015 Embassy Suites, East Peoria, IL

IN CONCERT Student Loan Counseling: Preferred Lender Lists Elyse Hiller – Southern Illinois University Carbondale Debbie Kane – Benedictine University Kathy Facenda – Sallie Mae

IN CONCERT Student Loan Counseling: Using a Preferred Lender List -Using a Preferred Lender List -Understanding Preferred Lender Arrangements -Types of Preferred Lender Lists -School Best Practices -- Counseling Students Using or Not Using a Preferred Lender List

Using a Preferred Lender List A list can help students and families make smart, informed decisions based on your researched list of credible and responsible lenders. It can also be an important tool for counseling students on their gap financing options and helping them identify the lender that offers the best combination of value and service. Some schools prefer to not have a lender list and instead have students and their families perform their own research on gap financing. ILASFAA Conference In Concert

Preferred Lender Lists as a Counseling Tool Preferred lender lists can be beneficial counseling tools because they: Allow schools to act as an advocate for families, providing relevant and meaningful lender and product information all in one consolidated source Guide students through the entire student loan process – from start to finish Allows financial aid office staff to counsel families on the financing options available to them Provide families with an opportunity to compare products in a consistent manner Help families navigate through your school’s preferred process - from application to certification and disbursement ILASFAA Conference In Concert

Understanding Preferred Lender Arrangements ILASFAA Conference In Concert A preferred lender arrangement exists if the school: ► Recommends, promotes or endorses a lender—even if that recommendation is not in the form of a lender list ► Refers their students to a 3 rd party entity that manages a listing of private lenders on behalf of the school ► Refers their students to a 3 rd party entity where the lenders pay a fee based on loan volume generated ► Provides a list of lenders that is not a neutral, comprehensive list REMINDER A preferred lender arrangement is not limited to activities of the financial aid office. Rules may apply to activities of other offices on campus or affiliated organizations. REMINDER A preferred lender arrangement is not limited to activities of the financial aid office. Rules may apply to activities of other offices on campus or affiliated organizations.

Understanding Preferred Lender Arrangements (cont.) ILASFAA Conference In Concert Scenarios NOT considered to be a preferred lender arrangement: ► If a school provides a neutral, comprehensive list of lenders who lent at the school in the past  This is often referred to as a historical list of lenders.  The school cannot use judgment regarding which lenders to include on the list and the school cannot rank, recommend, promote, or endorse any of these lenders  It must also reference that a student is free to choose any lender ► If a school refers its students to a third-party entity that maintains a comprehensive, neutral listing of private education lenders  The school must ensure that the listing is broad in scope and cannot endorse or recommend any of the lenders on the list  The lenders on the list cannot pay the 3 rd party entity to be placed on the list or pay the 3 rd party entity a fee based on any loan volume generated

Myths Regarding Preferred Lender Lists ILASFAA Conference In Concert

Maintaining a Preferred Lender List ILASFAA Conference In Concert The HEOA formalized many of the best practices schools are following today. HEOA Lender List Requirements:  Disclose to families the method, criteria and rationale used in selecting lenders with which you have a “Preferred Lender Arrangement” (PLA)  Provide the Truth in Lending Act (TILA) information for each lender listed  List at least two unaffiliated lenders and describe any relationship a lender may have with another lender on your list  Remind students and families that they may have access to free or lower cost federal loan options  Differentiate private loan information from Title IV loan information  Disclose that students do not have to borrow from a lender on the preferred lender list  Consider using a 3 rd party provider such as ELM Select or Fast Choice. They can simplify the process even more by providing an online lender list tool. Once you select your lenders, they work with the lenders directly to obtain up-to-date content and host the site.

Differentiating Private Loan Lenders ILASFAA Conference In Concert Schools should also consider the following when selecting a private loan provider to be included on a preferred lender list: ► What is the provider’s financial strength and longevity in the industry? ► Do they have superior customer service for families? ► Do they have an account management team? ► Are there low cost funding options available? ► Is pricing available that rewards applicants who have maintained good credit? ► Does the lender offer a variety of in-school repayment options and help educate families on the impact of their decision? ► Are they fully HEOA fully compliant in their online loan delivery process? ► Do they have an electronic self-certification process? ► Does the program require school certification?

Best Practices for School Hosted Lender Lists Disclose  Sufficient information that will allow families to make an educated decision  For school specific lender lists, the criteria used to select the lenders on your list  For historical lender lists, a statement that your office maintains a position of non-preference toward any particular lender on the list  The TILA information for each lender  That students may choose a lender of their choice and are not obligated to choose from your lender list Remind Students  To maximize free money and federal loans before using private loans  To carefully compare lenders and review all terms and conditions before applying ILASFAA Conference In Concert

Best Practices for School Hosted Lender Lists (cont.) Provide  Information on federal loans  An overview of the private loan application process, including information about HEOA disclosures and the self-certification form  A list of sample questions students may want to ask a lender  A timeline of when to shop and when to apply Provide a link to lenders’ web sites so you are not in the position of updating private loan terms and conditions as they may change periodically Keep the number of clicks to lender information to a minimum ILASFAA Conference In Concert

Benedictine University ILASFAA Conference In Concert Customer Service Focus Financial counseling to our students

Financing the Gap Federal Stafford Loans Parent PLUS Loan Private Loan ILASFAA Conference In Concert

Private Loan Information *Preferred Lender List* Loan Comparison Tool available on our website thru ELM Select Provide student with “Choosing a Lender” tips Provide student with “Borrower Benefits” tips Lender brochures available in our office ILASFAA Conference In Concert

Southern Illinois University Best Practices ILASFAA Conference In Concert

Financing the Gap Parent Plus Loan Available to Parents of Dependent Students Available to Parents of Dependent Students Parent may borrow up to the Estimated Cost of Attendance less resources received by the student Parent may borrow up to the Estimated Cost of Attendance less resources received by the student The current interest rate is 7.21% The current interest rate is 7.21% Parent Plus Loan Application is available electronically at studentloans.gov Parent Plus Loan Application is available electronically at studentloans.gov ILASFAA Conference In Concert

Financing the Gap Alternative Loan Student may borrow up to the Estimated Cost of Attendance less resource and all other financial aid received by the student Student may borrow up to the Estimated Cost of Attendance less resource and all other financial aid received by the student Student may be required to have co-signer Student may be required to have co-signer Interest rate will be based on credit Interest rate will be based on credit Visit finaid.org for additional information Visit finaid.org for additional information ILASFAA Conference In Concert