Session GA-05 Lender ID Assignment Rules and Process Angelita Dozier U.S. Department of Education

22 Background HEA Sec 435(d)(1) and 34 CFR Section identify entities eligible to participate in the Federal Family Education Loan (FFEL) program Currently there are three predominant participants in the FFEL program: –traditional lenders (banks & credit unions), –schools, and –institutions using an eligible lender trustee (ELTs) The purpose of the LID is to track participants in the FFEL program

33 Enrollment Process All institutions are required to work with a guaranty agency (of their choice) to initiate the LID enrollment process. All requests must come from the guaranty agency; the guaranty agency submits a request on behalf of the lender to the Department The guaranty agency or lender may provide supporting documentation directly to the FSA LID Process Team

4 Request for New, Reactivation, or Reassignment LID# Requests should be ed to The request from the guarantor must provide the following: –Tax-ID Number of the lender –Name of lender –Address of lender –Contact person at the lending institution

5 Request for New, Reactivation, or Reassignment LID# (con’t) Phone number of the contact person Fax number of the contact person address of the contact person Certification that the lender is an eligible lender according to (b) Assurance that all parties are in communication and have entered into agreements

6 Request for New, Reactivation, or Reassignment LID# (con’t) Certification for not-for-profit status (if applicable) and assurance that lender will not violate 50% rule For ELT arrangements, additional documentation is required

7 Documentation Required for ELT Arrangement Financial statements Financing plan Business cases Agreement with ELT and beneficial holder

8 ELT Arrangement A lender may request a LID as an ELT for organizations that are not considered eligible lenders; also referred to as ‘beneficial holders’ of student loans Lenders should have a comprehensive understanding of the beneficial holder (i.e. plans to originate and sell, originate and hold, buy, etc.)

9 School As Lenders No new requests for schools to act as a lender can be approved - 34 CFR No school can make or originate loans unless they were an eligible lender as of Feb. 7, 2006 and must have made one or more FFEL loans on or before April 1, 2006

10 School As Lenders (con’t) Schools using an ELT arrangement would need to be in a contract with the trustee on or before Sept. 30, 2006 and the ELT would have to hold at least one loan in trust on behalf of the school on Sept. 30, 2006

11 Reassignment A lender may request to reassign their LID(s) to another lender FSA expects all participating entities to notify the Department of any pending mergers and/or acquisitions

12 Reassignment (con’t) Scenarios that may result from a merger/acquisition: –Both parties participate in FFEL and will continue to maintain separate LIDs –Both parties participate in FFEL and LIDs will be merged –Transfer of ELT/beneficial holder to new ELT

13 Deactivation Reasons for deactivation of a LID: –Merger/Acquisition of lender –Lender no longer wants to participate in the program –FSA/CFO may request deactivation due to non-billing for the last two quarters

14 Deactivation (con’t) –ED/FSA may deactivate due to outstanding audit/program review issues or termination from the FFEL program –Lender sells their entire portfolio to another lender and wants to exit the program

15 Deactivation (con’t) FSA will complete the following steps prior to deactivating a LID: –Determine if money is owed to the Department or the lender –Determine if all Consolidation Loan Rebate Fees have been paid

16 REQUEST FOR ADDITIONAL LID(s) LIDs are not assigned to accommodate a contractual or organizational issue that a FFEL lender has with their existing servicer(s)

17 REQUEST FOR ADDITIONAL LID(s) (con’t) The request for additional LID(s) will be denied if the lender needs to segregate the portfolio: –Due to multiple servicers –Due to varying borrower benefit programs –Due to a desire to track school activity or –Due to accounting/finance purposes

18 Hold Procedures Placing a lender on “hold” allows FSA to suspend interest and special allowance payments to the lender for non-compliance or other issues Reasons for placing a lender on hold: –Failure to submit required annual compliance audits –Non-payment of fines or fees as result of audit or program review or –Other negligent reasons

19 Organization Participation Agreement (OPA) A completed and signed OPA indicates that the lender, servicer, or eligible lender trustee agrees to submit data on the quarterly Lender Reporting System (LaRs) to the U.S. Department of Education and to receive data from the Department electronically

20 If you are an ELIGIBLE LENDER: Lender Name_____________________________________________________________ Lender Identification (LID) Number(s)_________________________________________ Authorizing Official for LID Number(s) (please print): _____________________________ Original Signature________________________________ Date____________________ If you are a lender SERVICER: Servicer Name____________________________________________________________ Servicer Identification Number filed on behalf of LID Numbers_____________________ ________________________________________________________________________ Authorizing Official for Servicer (please print): __________________________________ Original Signature________________________________ Date____________________ If you are an Eligible Lender TRUSTEE: Eligible Lender Trustee Name_______________________________________________ LID Number(s)__________________________________________________________ Authorizing Official of Lender for ID Number(s) (please print): ____________________ _______________________________________________________________________ Original Signature________________________________ Date___________________ Name of Entity(ies) for whom the Trustee is acting: _____________________________ _______________________________________________________________________ U.S. Department of Education Lender/Servicer Organization Participation Agreement

21 OPA Recertification Process Every two (2) years a lender should submit a newly signed OPA Beginning 2008, all lenders will receive an requesting their OPA to be submitted and recertified If a lender does not provide a new OPA within a reasonable amount of time, the lender will be deactivated

22 Lender Application Process (LAP) Application for the lender to provide demographic data, relationship information with guarantor and servicer, and bank account data to be processed by the Department of Education

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24 Contact Information We appreciate your feedback and comments. The LID Process Team can be reached at: Phone: Fax: