1. Federal Loan Servicer Panel Discussion
Session14
Federal Loan Servicer Panel Discussion
Sue O’Flaherty| Nov U.S. Department of Education 2012 Fall Conference

2. Session Format Servicing Background
Department of Education Loan Services
Session Format
Servicing Background
Overview of Loan Lifecycle including Frequently Asked Questions
On-boarding
In-School
Grace
Repayment
Delinquent Repayment
Questions for our Servicers

3. Federal Loan Servicers
“TIVAS”
Title IV Additional Servicers
“TIVAS”
An acronym used by FSA which stands for the Title IV Additional Servicers. In communications with schools, borrowers, and the financial aid community, FSA uses the term “federal loan servicers.”

4. Panel Representative:
Meet the Panel Members
Panel Representative:
Servicer :
Dan Weigle
Brett Lindquist
Jim Harris
Bob Leary

5. Our Federal Loan Servicers:
Comply with legislative regulatory requirements and provide unique services
Educate and inform borrowers regarding the tools and options available to assist them in the management of their student loans
Offer multiple repayment options tailored to borrower preferences (i.e. online payments, ACH, check, etc.)
Provide self-service tools for borrowers and options to receive bills and/or correspondence electronically
Offer dedicated services to schools to help manage cohort default rates

6. Federal Loan Servicers - TIVAS
Direct Loan Servicing Center (ACS)
FedLoan Servicing (PHEAA)
Great Lakes Educational Loan Services, Inc.
Nelnet
Sallie Mae
COD S E R V I C N G
COD LDE
Origination
Disbursement
Loan Allocation
Servicer Assignment
Customer Service
LDE : Loan Distribution Engine: interface to assign loans to the federal loan servicers.
“Booked” Loan: occurs when the COD system accepts an origination record; links p-note to the record and accepts actual disbursement.
The federal loan servicer is assigned upon “booking” of loan.

7. Federal Loan Servicers
Not-For-Profit Servicers
“Not-For-Profit awarded federal loan servicing contracts under the HCERA/SAFRA Not-For-Profit (NFP) Servicer Program solicitation.

8. Not-For-Profit Servicers
Federal loan servicing contracts awarded under the HCERA/SAFRA Not-For-Profit (NFP) Servicer Program solicitation
We continue to expand our federal loan servicer team as our loan portfolio grows
Whether individual or team award, our customers will know and face one servicer

9. Not-For-Profit Servicers
NFP Servicer
NSLDS Name
NSLDS Code
Aspire Resources Inc.
DEPT OF ED/ASPIRE RESOURCES INC.-ISL
503
CornerStone
DEPT OF ED/CORNERSTONE-UHEAA
502
EdManage
DEPT OF ED/EDMANAGE
505
ESA/Edfinancial
DEPT OF ED/ESA-EDFINANCIAL
501
Granite State – GSMR
DEPT OF ED/GRANITE STATE-GSMR-NH
504
KSA Servicing (Kentucky)
DEPT OF ED/KSA SERVICING
508
MOHELA
DEPT OF ED/MOHELA
500
OSLA Servicing
DEPT OF ED/OSLA SERVICING
506
VSAC Federal Loans
DEPT OF ED/VSAC SERVICING
511
There are seven more NFP’s tentatively scheduled to go live in 2013.
The solicitation is open until 12/2013 so there is a potential for more NFP’s to be added.  

10. Challenges and Benefits
The federal loan servicers and FSA collaborate on solutions to borrower, school, regulatory and operational issues
Through the multi-servicer, borrower-centric approach, schools will notice different processes and procedures offered by the servicers
The competitive structure of the servicing contracts allows for more innovation and creativity
More similarities than significant differences

11. Measuring Performance
Borrower Satisfaction
School Satisfaction
FSA and Partner Satisfaction
Default Prevention Measures
Servicer Performance Score

12. Allocation Methodology
Allocations are based on rankings
Survey results
Repayment statistics
Most points for first place
One point for last place
Percent of new loans = percent of points

13. Session Format Overview of Loan Lifecycle On-boarding In-School Grace
Department of Education Loan Services
Session Format
Servicing Background
Overview of Loan Lifecycle
On-boarding
In-School
Grace
Repayment
Delinquent Repayment
Questions for our Servicers
On-boarding
In-School
Grace
Repayment
Delinquent Repayment

14. Loan Lifecycle
From a servicing perspective there are various stages that make up a borrowers “loan lifecycle” in which specific activities and questions arise
Although the stages are student/borrower lifecycle stages, we know that schools have a significant role in each of these lifecycle stages
Specific activities are completed in each of the lifecycle stages and student borrowers contact their Financial Aid Administrators with questions throughout the stages

15. Servicer Role - Loan Lifecycle
On-Boarding
In-School
Grace
Repayment
Delinquent Repayment
Establish Customer
Relationship
Contact information
Online acct set-up
Tools available
“We’re here to help”
Prepare for Successful
Transition to Repayment
Early intervention
Repayment options
Repay plan modeling
Reminder to set up acct
“We’re here to help”
Focus on Healthy Repayment
Predictive modeling/segmentation
Reminders of repayment solutions
Proactive skip-tracing
Increasing intensity of contact
“We’re here to help”
Ensure Successful
Transition to Repayment
Early intervention assistance
Repayment options
Promote auto-debit
Repayment tools available
Billing reminders
Transaction updates
Outreach to at risk borrowers
Repayment counseling
Self-service options
“We’re here to help”
Maintain Contact
Obligation reminders
Financial Literacy
NSLDS Update/exchange
Answer questions
“We’re here to help”
Communication Channels
USPS
Phone
Web
Social media
Text
Tools Available
Financial Literacy
Self service options
Numerous payment options
Repayment plan modeling
Call center agents
Services Offered
School default management assistance
School access to borrower acct info
School call center
School webinars/relevant servicing info

16. On-Boarding : Things to Remember…
The federal loan servicer is assigned upon the “booking” of the loan. Booking occurs when COD accepts an origination record, links to the p-note, and accepts an actual disbursement.
COD checks to see if the borrower has a previous loan and sends the next loan to the same servicer. If it is a new borrower, the allocation scores are used to determine which servicer receives the new borrower.
New borrowers are assigned to Great Lakes, FedLoan, Nelnet, and Sallie Mae based upon percentages assigned by FSA. The percentages of new loans each servicer receives is based on its performance (default rates & customer service scores).

17. On-Boarding Here’s how it works…
When we assign a student or parent borrower’s Direct Loans to a federal loan servicer, the servicer corresponds with the borrower.
The “welcome” correspondence notifies the borrower of the servicer, toll-free phone number, and website information.
Always refer borrower to NSLDS if they need to identify their federal loan servicer. The federal loan servicers report loan information to NSLDS on a weekly basis. 

18. In-School – Servicer Overview
Presented by: Brett Lindquist – Great Lakes
The in-school stage begins when a loan is assigned to a TIVAS from the COD system and ends when a student drops below half-time enrollment
During the in-school stage, new loans are assigned to a servicer; in the case of an unsubsidized loan, interest accrues; financial literacy education; and borrowers learn about their servicer

19. In-School Stage: Commonly Asked Questions
Presented by: Brett Lindquist – Great Lakes
Interest Statements:
How and when do borrowers receive interest notices?
How do borrowers make interest payments on their unsubsidized loans while in school?
Loan Cancellation:
When a school cancels or reduces a students loan, do they need to notify the servicer?

20. In-School Stage: Commonly Asked Questions
Presented by: Brett Lindquist – Great Lakes
Borrower Contact:
What types of servicer communications and contact occurs while the borrower is in school?
What happens to the borrower if the school is unaware that the borrower has left school?

21. Grace Period - Servicer Overview
Presented by: Jim Harris – Nelnet
The Grace Stage or “period” of the lifecycle begins when the student drops below half-time enrollment or graduates. Grace ends 6 months from the point of time from when the student ceased to be at least half-time
The grace period is important so that borrowers can select their payment period; continue to become familiar with servicer; financial literacy education; and prepare for the first payment

22. The Grace Stage Commonly Asked Questions
Presented by: Jim Harris – Nelnet
Borrower Communication:
How often and at what key times do the servicers communicate with the borrower during the grace period?
Entering Repayment:
What is the servicer process if the student hasn’t selected a repayment plan?
When is interest capitalized?
How early can borrowers apply for IBR?

23. The Grace Stage Commonly Asked Questions
Presented by: Jim Harris – Nelnet
What happens to the borrower if the school is unaware that the borrower has left school?
Reminder to Schools:
When a borrower leaves campus, promptly report to NSLDS.
Of the borrowers who defaulted, most did not receive their full 6-month grace period due to late or inaccurate enrollment notification by the school.

24. Repayment - Servicer Overview
Presented by: Dan Weigle – FedLoan Servicing
The repayment stage begins when the borrower’s grace period is over and ends when their loan is paid in full
During this stage, borrowers receive billing statements and make payments; they may change their payment plan and or obtain deferment/forbearance status; receive 1098 Interest documents for tax filing; and pay off their loan in full

25. Repayment Stage Commonly Asked Questions
Presented by: Dan Weigle – FedLoan Servicing
Making Payments:
What are the various ways a borrower can make payment on their loan (i.e. mobile devices)?
How and when do borrowers get a .25% reduction for automatic payments?
Trouble Making Payments:
How do the federal servicers counsel borrowers if they are having trouble making their loan payments?

26. Repayment Stage Commonly Asked Questions
Presented by: Dan Weigle – FedLoan Servicing
Repayment In-School Status
What happens when a borrower returns to school? Are they assigned a new servicer?
Public Service Loan Forgiveness (PSLF)
When should borrowers sign up for Public Service Loan Forgiveness and what is the process?

27. Delinquency - Servicer Overview
Presented by: Bob Leary – Sallie Mae
Delinquency stage begins when the loan becomes past due – that is, when the borrower does not make the scheduled payment. Collection continues until the past due amount is satisfied or resolved
During delinquency, servicers contact borrowers by phone, , and mail and work with the borrower to resolve the delinquency

28. Delinquency Stage Commonly Asked Questions
Presented by: Bob Leary – Sallie Mae
Delinquency – Borrowers
How early do servicers start to contact delinquent borrowers?
Is the borrower defaulted at 270 days delinquent?
What is the latest outreach effort to a delinquent borrower from the servicers?

29. Delinquency Stage Commonly Asked Questions
Presented by: Bob Leary – Sallie Mae
Delinquency – Schools
Can schools stay on the phone with the borrower and talk with a servicer school support team (i.e. three way call)?
How do the servicers work with schools around delinquency efforts?

30. Reporting Resources: Centralized Loan Information - NSLDS:
NSLDS Reports for Default/Delinquency Prevention:
School Portfolio Report
Delinquent Borrower Report
Individual Servicer Reports
Provide greater level of detail
Offer customization options
Include only loans serviced by that organization

31. Session Format Questions for our Servicers Servicing Background
Department of Education Loan Services
Session Format
Servicing Background
Overview of Loan Lifecycle including Frequently Asked Questions
On-boarding
In-School
Grace
Repayment
Delinquent Repayment
Questions for our Servicers

32. Questions
Thank You!
Sue O'Flaherty