Session #42 What’s New in Direct Loans for Lisa DiCarlo Julie Aloisio Cynthia Battle

Session Outline March 2008 Release Updates MPN Updates Origination Fee Update Reminder Tools and Training Direct Loan Servicing 2

March 2008 Release Updates Inconsistent Identifiers Edit 16 Changes Additional Unsubsidized Indicator Award Discharges & MPN Expiration Date 3

Inconsistent Identifiers New Edits only applicable to award years and forward 4 Edit Edit CodeBlockMessage Award Type Affected 147 RPersonIdentifier inconsistency for PLUS Award for Graduate/Professional Student DL-PLUS 148 WPersonFirst Name inconsistency for a PLUS Award for Graduate/Professional Student DL-PLUS 149RPerson Award Identifier inconsistency for PLUS Award for Parent of a Dependent Undergraduate Student All

Edit 147 For a Grad PLUS award (Student and Borrower SSN match), all identifier information must match. 5 Student Borrower MUST MATCH Edit Edit CodeBlockMessage Award Type Affected 147 RPersonIdentifier inconsistency for PLUS Award for Graduate/Professional Student DL-PLUS

Edit 148 For a Grad PLUS award (Student and Borrower SSN match), first name should match. 6 Student Borrower MUST MATCH Edit Edit CodeBlockMessage Award Type Affected 148 WPersonFirst Name inconsistency for a PLUS Award for Graduate/Professional Student DL-PLUS

Edit 149 For a Parent PLUS award (Student and Borrower SSN do not match), all identifier information must be different for the Student and the Borrower. Student and Borrower Date of Birth (DoB) change must not match Student DoB change must not match what exists on COD for Borrower DoB AND no Borrower DoB change tag is submitted Borrower DoB change must not match what exists on COD for Student DoB AND no Student DoB change tag is submitted This can be triggered by all award programs! 7 Edit Edit CodeBlockMessage Award Type Affected 149RPerson Award Identifier inconsistency for PLUS Award for Parent of a Dependent Undergraduate Student All

Edit 149 Example Borrower B created on COD for PLUS award Borrower B (Student B on Pell award) submits a Date of Birth change 8 Parent PLUS Student A01/01/81 Borrower B02/02/55 Pell Student B01/01/81 Borrower B Date of Birth now matches Student A - This will trigger Reject Edit 149!

Edit 16 Changes 9 Edit 16 has been divided into 4 new edits. Only applicable for award years and forward Edit 16 will only be triggered for award years and prior

Edit 16 Changes 10 Edit Edit CodeBlockMessage Award Type Affected 150RAward Incorrect Student Grade Level on a Direct Loan PLUS Award for Graduate/Professional Student DL-PLUS 151RPerson Invalid Student/Borrower SSN combination on a Direct Loan PLUS Award for Graduate/Professional Student DL-PLUS 152RPerson Invalid Student SSN change on a Direct Loan PLUS Award for Parent of a Dependent Undergraduate Student All 153RAward Invalid Borrower SSN change on a Direct Loan PLUS Award for Parent of a Dependent Undergraduate Student All

Edit 153 Example Borrower B created on COD for PLUS award Borrower B (Student B on ACG award) submits an SSN change 11 Parent PLUS Student A Borrower B ACG Student B Borrower B SSN now matches Student A - This will trigger Reject Edit 153!

Edit 16 Changes A new Edit will be added 12 Edit Edit CodeBlockMessage Award Type Affected 159RAward Incorrect Student Grade Level for a Parent PLUS award DL-PLUS Only applicable for award years and forward

13 Required for all Direct Loans Valid values: “D” or “I” Blank or other values will trigger Reject Edit 996 Required for Unsubsidized Direct Loans Valid values: “true” or “false” Blank or other values will trigger Reject Edit 998 Edit 994 will be triggered for missing tags Additional Unsubsidized Indicator

14 Loan Key Award Disbursement Additional Unsubsidized Indicator

15 Edit Edit CodeBlockMessage Award Type Affected 154RAward Dependency Status set to D and Grade Level greater than or equal to 6 DL 156RAward Dependency Status set to I and Additional Unsubsidized Indicator set to true DL 157RAward Sum of Award Amounts exceeds Base Annual Loan Limit DL 158RAward HPPA Indicator set to true and Grade Level less than 6 DL Additional Unsubsidized Indicator New Edits

Annual Loan Limits 16 Grade Level Base Annual Loan Limit Combined Annual Loan Limit 0, 13,5007,500 24,5008,500 3, 4, 55,50010,500 6, 78,50020,500

17 Additional Unsubsidized Indicator Edit 157 Example Award TypeNumber Dependency StatusAUI Award Amount Award ResultReject Edit Sub001DN/A4500AN/A Unsub002Dfalse6000R157 Unsub002Dfalse1000AN/A Unsub002Dtrue6000AN/A A series of origination and maintenance records are submitted for a Student in Grade Level 5. His base limit is $5,500, combined limit is $10,500.

18 Additional Unsubsidized Indicator Edit 157 & Edit 039 If the highest applicable loan limit is greater than the Base Annual Loan Limit, then the COD System will employ Reject Edit 039 logic. Suppose series of origination and maintenance records are submitted for a Student in Grade Level 5. Award TypeNumber Dependency StatusAUI Award Amount Award ResultReject Edit Sub001DN/A4500AN/A Unsub002Dtrue6000AN/A Unsub002Dtrue6100R039

19 Award Discharges, MPN Expiration Date Upon award discharge, the COD system will update associated MPN(s) as follows: Discharge Code MessageMPN Expiration Dates Updated for… DDeathAll MPNs for Borrower G Unauthorized Signature/Unauthorized Payment MPN associated with specified loan IIdentity Theft MPN associated with specified loan

20 Discharge Reversal Recalculating MPN Expiration Date If MPN associated with the discharged loan… MPN Expiration Dates Will be recalculated as follows… Not linked to any loans with funded disbursements or is unlinked 365 days from MPN Received Date Linked to any loan with funded disbursements 3,650 days from MPN Received Date (Due to death) is linked to any awards with accepted and funded disbursements 3,650 days from MPN Received Date

21 Discharge Reversal Recalculating MPN Status Condition(s): Updated MPN Status New MPN Expiration Date <= Current Processing DateInactive Recalculated MPN Expiration Date > Current Processing Date MPN is linked to an awardActive MPN not linked to an awardPending

DL Rebuild File Impacts New fields added: Additional Unsubsidized Indicator (position 164) MPN Expiration Date (positions , length = 8) Pre-Professional Coursework Indicator (position 934) Positions were previously filler No change to record length Associated updates will be made to DL Tools 22

Session Outline March 2008 Release Updates MPN Updates Origination Fee Update Reminder Tools and Training Direct Loan Servicing 23

24 Requiring MPNs Before Disbursement Beginning in March 2008, all schools will be required to have an accepted MPN on file at COD before actual disbursements can be accepted for the associated Direct Loan award.

25 Requiring MPNs Before Disbursement Advance Funded SchoolAdvance Funded School –Anticipated Disbursement handling is not changed –Actual Disbursements will be rejected if there is no MPN on the system –May still draw down Push Cash SchoolPush Cash School –No Impact: Actual Disbursements will be rejected if there is no MPN on the system

PLUS MPN Redesign Incorporates HERA changes –Still ONE MPN for all PLUS borrower types (parent and graduate/professional student) New OMB form expiration date Incorporates Borrower’s Rights and Responsibilities (BRR) COD will not accept older MPN version after March 1, 2008!! 26

Session Outline March 2008 Release Updates MPN Updates Origination Fee Update Reminder Tools and Training Direct Loan Servicing 27

Reminder! Origination Fee Update As of July 1, 2008, the origination fee will be 2.0% 28 Origination Fee Percentage is based on Earliest Disbursement Date, NOT Award Year! Fee %Earliest Disbursement Date Range 3.0Prior to to to to and forward

Origination Fee Edits 29 Edit Edit CodeBlockMessage 140RAwardIncorrect Origination Fee Percent on New Awards 141RAward Cannot change the Origination Fee Percent on an Active Loan 142RAwardInvalid Origination Fee Percent on Award Changes 143RAward Disbursement Net, Fee, and/or Rebate Amounts are Incorrect based upon the Origination Fee Percentage 144RDisb Disbursement Dates do not match Origination Fee Percent on file

Session Outline March 2008 Release Updates MPN Updates Origination Fee Update Reminder Tools and Training Webinars COD Computer Based Training (CBT) Roll-Out Direct Loan Servicing 30

COD CBT Roll-Out 31 An exciting new CBT will be released by COD to familiarize users with the capabilities of the COD System! Now Available!

Webinars 32 Internet Training and Webinars

Session Outline March 2008 Release Updates MPN Updates Origination Fee Update Reminder Tools and Training Direct Loan Servicing 33

Direct Loan Servicing Updates 34 New Direct Loan Repayment Plans are in Effect! Changes as result of Higher Education Reconciliation Act (HERA) of 2005 Rollout Strategy Repayment Plan Terms

Roll Out Strategy In Repayment Selection Prior Selection After Borrowers who selected a repayment plan prior to implementation will remain on their pre- HERA selection (even if they have not entered repayment) Borrowers will make a repayment plan selection from one of the new repayment plans. Borrowers who are paying under one of the pre-HERA plans will see no change and will continue to pay under the terms of their plan. Direct Loan Repayment Plans

36 Available to all Direct Loan borrowers Fixed payments Maximum 10-year repayment period for Direct Subsidized, Direct Unsubsidized and Direct PLUS Loans Maximum 10 – to – 30 year repayment period for Direct Consolidation Loans, depending on total education loan debt Standard

37 Available to all Direct Loan borrowers Graduated payments Maximum 10-year repayment period for Direct Subsidized, Direct Unsubsidized and Direct PLUS Loans Maximum 10 – to – 30 year repayment period for Direct Consolidation Loans, depending on total education loan debt Graduated Direct Loan Repayment Plans

38 Direct Loan Repayment Plans Maximum Repayment Periods for Direct Consolidation Loan Borrowers Under the Standard and Graduated Repayment Plans Total Education Loan IndebtednessMaximum Repayment Period Less than $7,50010 years $7,500 to $9,99912 years $10,000 to $19,99915 years $20,000 to $39,99920 years $40,000 to $59,99925 years $60,000 or more30 years

39 Available only to new Direct Loan borrowers on or after October 7, 1998 (all loan types) with more than $30,000 in outstanding Direct Loan debt Payments:  Fixed or Graduated payments Maximum 25 - year repayment period regardless of loan type or amount of outstanding Direct Loan debt Extended Direct Loan Repayment Plans

40 Available to Direct Subsidized, Direct Unsubsidized, and Direct Consolidation Loan borrowers (including Direct Consolidation Loan borrowers who have consolidated Direct PLUS or Federal PLUS Loans) Not available to Direct PLUS Loan borrowers Variable payments based on income and loan debt Maximum 25 – year repayment period ICR Direct Loan Repayment Plans

41 Related Direct Loan Sessions Session #4 Title IV Funding to Schools: From COD to GAPS Session #24COD Web Hands On Session #40A Direct Loan Primer Session #41 Unlocking the Potential of Direct Loan Reports

42 Questions or Comments? We appreciate your feedback and comments. Direct Loan Operations Team can be reached via at:

Contact Information 43 Lisa DiCarlo Director, COD Systems/Operations and Direct Loan Operations (202) Julie Aloisio Management/Program Analyst, Direct Loan Operations (202) Cynthia Battle Direct Loan Servicing (Non-Default Group), Director (202)