Federal Direct Student Loan Program at Stonehill College

Federal Direct Student Loan Program at Stonehill College Eileen O’Leary, Director of Student Aid and Finance COHEAO Conference, January 29, 2007 Some facts about Stonehill….      2300 Full-time undergraduates Stonehill began in Direct Loans in year 1 (1994-95) $13.5 million loan volume 2006-2007 One person processes all Direct Loans FY04 cohort default rate of 1.3% Why did we move to DL?     Poor service from guarantors, lenders Complicated, cumbersome, time-consuming process, especially when changes to loans were required; most staff time spent on phone with lenders, servicers Looking for simple, one-stop-shopping alternative that would provide better customer service to our families Wanted more transparency and simplicity What have we experienced with DL?       Reduced administrative time and expense Streamlined process for students and parents A model that’s easy for families to understand More efficient, timely and predictable delivery of funds More efficient approval process Rave reviews from families Reasons for remaining in DL:  Customer service and administrative control:   FFELP: Controlled by multiple partners DL: Controlled by FAO – one stop shopping FFELP: Multiple loan servicing agents; loans may be sold several times over life of loan DL: Single point of service for life of the loan Additional 150% increase staffing would be needed to do FFELP Ease, predictability and reliability of obtaining DL funds to assist in cash flow predictions  Back-end servicing:    Administrative issues:   Reasons for remaining in DL:  Loan Consolidation with Perkins   FFELP: results in loss of Perkins grace period DL: does not result in loss of Perkins grace period FFELP and DL same except income contingent repayment option in DL with loan forgiven after 25 years DL borrowers can change repayment plans at any time without loss of benefits; not always true in FFELP FFELP: Multiple loan servicing agents; loans may be sold several times over life of loan DL: Single point of service for life of the loan  Repayment Plan    Back-end servicing:    Simplicity, Simplicity, Simplicity! GAO Report Administering Direct Lending at Stonehill College Information for families…  College web site is major source of information on Direct Lending All award letters are accompanied by a Financial Aid Guide that discusses the Direct Loan process for student and parent loans  New Student Processing…     New students are awarded their Direct Loan upon acceptance to the College on a paper award letter Award letter gives recipients ability to accept or decline the Direct Loan Those who have not declined the loan are sent information to complete MPN and Entrance Counseling on line in July Students who want to borrow and have not completed the MPN and/or Entrance Counseling on line prior to fall attendance, are required to do so in person at Registration Returning Students…    Returning Students e-award letters indicate appropriate Direct Loan level Message on award letter indicates that student has a MPN on file (from ISIR NSLDS data) and gives instructions for completing the confirmation of loan amount and desire to borrow New borrowers are given directions to complete MPN/Entrance Counseling process on-line Students with MPN (NSLDS):  “You have previously completed a Master Promissory Note for your Federal Direct Student Loan. If you wish to decline the loan or borrow less than the amount for which you are eligible, please email finaid@stonehill.edu. Otherwise, we will assume that you wish to borrow the full amount indicated.” Students with no MPN (NSLDS):  “To accept your Federal Direct Loan, you must first complete a student loan entrance interview online at www.dlservicer.ed.gov and then a Master Promissory Note (MPN) online at http://www.dlenote.ed.gov. Do not deduct the loan amount from your bill unless you have completed your entrance interview and MPN. If you wish to decline the loan or borrow less than the amount for which you are eligible, please email finaid@stonehill.edu.” How loans are processed…      Loans are packaged and exported in batch from PowerFAIDS to EDExpress Import process originates the loan in EDExpress Loan origination records are exported daily via EdConnect to COD Confirmations of origination are imported via EdConnect daily from COD Confirmation of completion of MPN and Entrance Counseling on-line are imported in e-file from COD Processing continued…     Identify through queries in EdExpress, which students are ready to be disbursed (MPN accepted; Entrance Counseling done) and how much can be disbursed Disburse these loans in batch in EdExpress (up to 10 days prior to first day of classes) and export disbursement file to COD Request through Controller amount to be drawn down through GAPS to cover loans disbursed in EdExpress Upload award and payment information into student accounts Reconciliation    After every drawdown reconciliation is performed by the loan officer Funds disbursed in EdExpress (and therefore at DL Servicer) are balanced to funds disbursed in student account system Annual reconciliation process is simple because we are in balance each time we draw down funds and disburse them to students PLUS Loans…       Parents request PLUS loan via web, in person, phone, fax, or e-mail Loan is originated in EDExpress Loan origination records are exported daily to COD. Credit check is performed at COD. Once the COD response file is imported into EdExpress (1 to 24 hours later), MPN is either completed by parent on-line or paper PN is mailed to parent borrower by college loan officer. (Credit check can be done “live” on-line if necessary.) If MPN is completed on-line, COD sends a confirmation file which is imported into EdExpress Pending amount of PLUS loan is added to Powerfaids and uploaded to billing Disbursements handled same as for student DL Changes to loan amounts/types…    Changes and adjustments are made as required and future requests for funds are adjusted to reflect any cash now not in use. Because funds are NOT attached to individual students but are managed in the aggregate, funds drawn for one student may be used for another, simplifying funds management Reports are run frequently to insure all systems are balanced. Tips for success…     Many hands makes heavy work so limit access to system…easy at small school. Balance aggregate funds paid to students in institutional system to DL Servicer disbursements and total drawdowns each time a drawdown is made. Track receipt and response files from COD Ask for help if needed from COD/DL Servicer Questions?