Transitioning to Direct Loans
Pending Legislation Student Aid and Fiscal Responsibility Act – HR 3221 Passed the House of Representatives 9/17/2009 Mandatory Pell Grant funding 100% Direct Loans July 1, 2009 and forward Expand/modify Perkins Loan Program
Where are we now… Transition Planning and Activities Developed Customer Support plan for the transition that includes support for all phases of transitioning 3
Where are we now… COD System capacity enhancements for 100% FFELP volume in progress, on time and on taget FSA Customer Service Centers Increased and trained staff Monitor incoming volume COD has dedicated OnBoarding Team to assist setup completion requests and “starts”
Where are we now… Other FSA systems gearing up myDirectLoan eMPN website NSLDS G5
Where are we now… Teams designed for targeted support Graduate/Professional Small schools Career Colleges Community Colleges HBCU, HSI, and Tribally controlled colleges Foreign schools Pacific Island Schools
Where are we now… Selected 4 additional Servicers Great Lakes Educational Loan Services NelNet Sallie Mae AES PHEAA 7
Where are we now… Training Spring and Summer “new school” DL training Direct Loan processing with EdExpress Business Officers Foreign Schools Extensive new suite of DL training Up to 4x per month after January
Where YOU Are Now… FSA made benign changes to most school profiles FSA made benign changes to most TG mailboxes Does NOT obligate school to process Direct Loans
10 Where YOU Are Now… What do you do next to be prepared Complete setup information Request completion of FSA setup 800/ FSA Transition Team
11 …to make you comfortable and hopefully not blue… Something old, something new…
The same Virtually all of the regulations Origination/Certification Loan type and interest* MPN Counseling *FFELP PLUS 8.5%, D/L PLUS 7.9%
Differences Disbursement Origination Fee/Upfront rebate Reconciliation Monthly
Differences Cash Direct Loan schools calculate and draw immediate need Single source – G5 Direct Loan Code Main Campus/Additional Location
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 15
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 16
Voila! 17
myDirectLoan log in 18
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 19
6 New DL School Options 20 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
21 Entrance Counseling The “What You Need” section of the myDirectLoan homepage provides users a guide for Entrance Counseling Information on Entrance Counseling and a link to the PIN site is provided
22 Direct Loan Processing Cycle
Originate Similar to Grants/FFELP Confirm eligibility Determine award/loan amount Create award School transmits award/loan origination data to COD Via Common Record and same transmission as Pell Grant data
Originate COD sends a Receipt The CR is readable and can be processed COD sends Response Accepted data Rejected data MPN status PLUS credit decision
Originate PLUS loan requires credit check Systemic check via Loan Origination submission School check via COD website Or after March 27, 2010… borrower initiate Denial Packet Explanation for denial/appeal process Pre-filled endorser form Materials to submit endorser form
Direct Loan Processing Cycle
Disbursements Advanced Funded Schools Calculate immediate need Draw funds from same source as other Title IV award funds - G5 Flexibility to avoid excess cash Remember Cash Management Rules Must submit data within 30 days of event Actual Disbursement Data substantiates drawn funds ALWAYS submit actual date
Master Promissory Note One lender, one MPN No linked MPN no disbursement Paper or electronic All MPNs 10-year active Provides borrower mobility School selected options COD School Options screen COD prints paper note options
Booked loan A “Booked” Loan is a GOOD thing… Accepted Origination record, MPN and 1 st actual disbursement Is now a binding obligation between borrower and ED 30-Day Warning Report ID’s unbooked loans for school
Reconciliation Monthly basis School reconciles internally Financial aid office/business office School reconciles externally COD/G5 School Account Statement (SAS) Know where the money is COD Reconciliation Specialists
Direct Loan Processing Cycle
32 School Services Online
School Services Slide 33 Default/Delinquency Management Pre-Repayment Counseling Calls begin two months prior to repayment s to assist with repayment options Delinquency Counseling Calls begin at 31 days (22 calls) Letters begin at 7 days delinquent (12) Call campaigns ($80k plus) Late Stage Delinquency
DL.ed.gov (current servicer) 34
Borrower Services Repayment options tailored to individual need Standard, Graduated, & Extended Income Based Repayment Plan Income Contingent Repayment Plan* Alternative Repayment Plan* Public Service Loan Forgiveness* *Unique to Direct Loan Program
Borrower Services Date due flexibility for all repayment plans Electronic billing/payments EDA and on-line payment options Self-Service tools for borrowers
Borrower Services Repayment incentives Online form submission with electronic signature Forbearance/Deferment
Some Things To Consider… IT Staff FSA Support Staff IT Reconciliation Resources Tools IT Staff Resources FSA Support Reconciliation
Some Things To Consider… Commonality with Grants Same person Same origination process Same disbursement process Same transmission vehicle
Some things to consider… Resources/Staff Commonality of awards Same system (COD) Same institution solution Work with your software provider to understand the DL process and fields
Some things to consider… COD staff resources for assistance COD Customer Service Representatives COD Issue Resolution Specialists COD Reconciliation Specialists
42 Questions and Comments contact for more information...
43 Questions and Comments