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					   Advisor
                                                                        Volume 1   Issue 4   July 2010




                  100 Airport Road
                Frankfort, KY 40601
                    800.928.8926
                  www.kheaa.com


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forum such as KHEAA Advisor, please send the question or topic
suggestion to Meredith Robinson at mrobinson@kheslc.com.




 In This Issue
 ....................................
 A Message from our Executive Director ............ 2 r ............2
 Holiday Closings...................................................2
 FFELP Loan Issues .......................................... 3-6
                                       r ..........................7
 KHEAA’s Net Price Calculator .......................... 7
 Private Loan Student Loan Marketplace ..........8
 Enhanced KHEAA.com.......................................9
           KHEAA.com.......................................9
                        ....................................
                            J   uly is the beginning of a new era in the administration of
                            federal student loan programs with implementation of 100
                            percent Direct Lending. In observance of the passing of the
                            Federal Family Education Loan Program (FFELP) into the
                            pages of history, I am extending our sincere appreciation
                            to our school and lender partners for your tremendous
                            support. For the last four decades, we have been honored
                            and privileged to be your local partner in helping students
                            and families pursue a college education or technical training.
                            Without your support, fulfilling our public-purpose mission
                            would not have been possible.

Many of you, along with much of our staff and management, have dedicated entire careers
to assisting students in pursuing their educational dreams. FFELP was a resounding
success because of you! Your accomplishments are something for which I hope you will
be very proud!

As we look to the future, we reaffirm our commitment to our public-purpose mission and
are confident that we will provide quality programs and services for many years to come.
Like you, helping students and families pursue higher education will remain at the heart
of everything we do. Thank you again for your friendship and support.




Executive Director/CEO
KHEAA/KHESLC




                         HOLIDAY CLOSINGS



                            Monday, July 5, 2010
                          Monday, September 6, 2010
                                        2
 FFELP LOAN PROCESSING AND DISBURSEMENT ISSUES


In a previous KHEAAPartners message on the termination of new
lending in the FFEL Program, we provided information regarding
closing dates for schools that use our loan origination, disbursement
and guarantee services. To further assist schools in the transition to
Direct Lending, we are providing additional information regarding
the termination of new FFELP lending and the processing and
disbursement of loans that we guarantee, originate and disburse.
For this purpose, we are utilizing selected portions of the “Direct
Loan Transition School Q&A” compiled and published by the
National Council of Higher Education Loan Programs (NCHELP)
and reprinted by NASFAA. The entire Q&A is available on the
NCHELP Direct Loan Transition Web Page.

For clarity, we have provided headings for the Q&As below. The first group of Q&As addresses general issues regarding the
termination of new FFELP lending. The remaining groups address issues regarding hold and release, increases, cancellations,
refunds, reissues, reinstatements, reallocations, schools with set disbursement days, and entrance and exit counseling. Please
note that answers with an asterik (*) denote responses provided by the Department of Education and answers with two asteriks
(**) denote information specific to KHEAA, KHESLC, or the Alabama College Loan Program (ACLP). If you have any
questions or concerns regarding the Q&As, please contact KHEAA loan personnel at 800-617-2699.

                                                    GENERAL QUESTIONS
 •    Question: What is the triggering event of the provisions from the Health Care and Education Reconciliation Act of
      2010?
 •    Answer: The legislation terminates the authority to make or insure new loans under FFELP after June 30, 2010, but does
      not totally eliminate the FFEL Program. The inability to make new FFELP loans is triggered off of the date the loan is
      first disbursed by the lender. In order for a FFELP loan to be made, the first disbursement of the FFELP loan must occur
      prior to July 1, 2010 (including for borrowers subject to 30-day delayed delivery). (NOTE: The date on which a loan is
      certified is not relevant; the date on which the loan is first disbursed is key).
 •    Question: Will FFELP loans made prior to July 1, 2010, be serviced as FFELP loans?
 •    Answer: Yes, all existing FFELP loans and new FFELP loans made prior to July 1, 2010, will continue to be services as
      FFELP loans throughout the remainder of the life of the loans.
 •    Question: According to regulations and guidance in the FSA Handbook, a student (or parent borrowing on behalf of
      a dependent student) may not receive a Direct Loan and a FFELP loan for the same period of enrollment. Given the
      transition to Direct loan only, is this guidance still applicable?
 •    Answer: No. The legislation deleted §454(a)(4) of the Higher Education Act, which prohibited students (and parents)
      from receiving loans under both the FFELP and Direct Loan programs for the same period of enrollment. This statutory
      change supersedes the regulation and FSA Handbook guidance.
 •    Question: If a school certifies a FFELP loan prior to June 30, 2010 and schedules the first disbursement to occur prior to
      July 1, 2010, but schedules the second disbursement to occur on or after July 1, 2010, can the FFELP loan still be made?
      For example:
                                 - School certifies loan on June 15, 2010
                                 - 1st disbursement is scheduled for June 20, 2010
                                 - 2nd disbursement is scheduled for July 15, 2010

 •    Answer: Yes. As long as the first disbursement on the FFELP loan occurs prior to July 1, 2010, it is a valid loan even if
      the second (and any subsequent) disbursement is scheduled to occur on or after July 1, 2010.



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**Subsequent disbursements will be made according to each individual lender’s preferences. As a reminder for KHESLC
and the ACLP: For FFELP loans that were first disbursed by April 9, 2010, KHESLC and ACLP will fund subsequent
disbursements regardless of the date of the final scheduled disbursement. For FFELP loans that were first disbursed
between April 20, 2010 and June 30, 2010, KHESLC and ACLP will fund subsequent disbursements made no later than
September 30, 2010.

•   Question: If a school certifies a FFELP loan prior to July 1, 2010 but both the first and second disbursements are scheduled
    to occur on or after this date, will the loan be guaranteed or rejected?
•   Answer: The loan will be rejected (with an 081 Lender ineligible error code) and will need to be certified as a Direct Loan
    since the authority to originate FFELP loans with a first disbursement scheduled on or after July 1, 2010 will cease.

For Schools That Use Hold and Release Functions

•   Question: What happens if loans are certified and guaranteed prior to July 1, 2010, but the school wishes to “hold” the loans
    for first disbursement to occur on or after July 1, 2010?
•   Answer: The inability to make a FFELP loan is triggered off of the date the funds are first disbursed by the lender. If the
    first disbursement of the loan would not occur on or after July 1, 2010 (meaning in this case that the first disbursement
    would not be released until on or after July 1, 2010), the FFELP loans cannot be made. The school must certify a Direct
    Loan for the student.

**Any 1st disbursements in “hold” status must be released before June 28 to ensure that they will disburse before July 1,
2010. KHEAA will run queries of disbursements still in “hold” status on June 28 and will contact schools to see if those
disbursements should be released or cancelled.

Increases/Cancellation/Refund/Reissues/Reinstatements/Reallocation Issues

•   Question: A school certifies a FFELP loan prior to July 1, 2010 and the first disbursement date is made prior to July 1,
    2010. After July 1st, the student decides more money is needed and the school determines that the student is eligible for
    an increased loan amount. Can the school increase the existing FFELP loan or does the school have to submit a new loan
    request through the Direct Loan program for the increased amount?
•   Answer: If the school is able to work with its trading partners to increase the existing FFELP loan (e.g., via a CommonLine
    change transaction), the additional loan funds can be processed because the first disbursement of the FFELP loan was made
    prior to July 1, 2010. However, if the school is unable to increase the existing FFELP loan and new loan certification is
    needed, the new loan must be originated through the Direct Loan Program.


**A loan must have an existing disbursement that has not disbursed in order to increase the loan amount.

•   Question: A FFELP loan is guaranteed for $2000 and the first disbursement is made prior to July 1, 2010. On or after July
    1, 2010 the school determines that the borrower is eligible for additional loan funds and sends a request to increase the loan
    amount by $500. Can the increased amount be added to the loan?

                                                          •       *Answer: Yes. A school may request an increase if the lender’s
                                                                  system treats this as an adjustment to an existing loan that was
                                                                  first disbursed prior to July 1, 2010 or if the lender treats this
                                                                  kind of “positive” adjustment as a new loan that requires a new
                                                                  certification by the school, only if the first disbursement of that
                                                                  supplemental loan is also first disbursed prior to July 1, 2010.

                                                          **A loan must have an existing disbursement that has not
                                                          disbursed in order to increase the loan amount.


                                                              4
    •    Question: What happens if a first disbursement that is scheduled to occur prior to July 1, 2010 is cancelled prior to
         disbursement but the school wishes to keep the second disbursement that is scheduled to occur after July 1, 2010? Can
         the FFELP loan still be made?
    •    Answer: No. The FFELP loan can no longer be made because the cancellation of the first disbursement would result in
         the FFELP loan being first disbursed on or after July 1, 2010, which cannot occur based on the legislative changes. The
         school would need to certify a Direct Loan for the student.
    •    Question: The first disbursement of a FFELP loan is made prior to July 1, 2010, but the school subsequently returns the
         disbursement and asks to have the first disbursement reissued. Based on the timing of the school request, the lender will
         have to reissue the first disbursement on or after July 1, 2010. Will the lender be allowed to reissue this disbursement of
         the FFELP loan?
    •    *Answer: No. The school must originate a new loan under the Direct Loan program. The Department of Education has
         stated, for purposes of the transition from FFELP to the Direct Loan program, that any rescheduled first disbursement
         (the actual transfer of funds to the school that are delivered) of a FFELP loan must take place prior to July 1, 2010 for the
         remainder of the loan to be made (disbursed) under FFELP.
    •    Question: The school schedules a first disbursement of a FFELP loan prior to July 1, 2010, but before the disbursement
         is made the school informs the lender to cancel that disbursement. If the school later needs to reinstate that disbursement
         can the lender make that disbursement or must the school originate a new loan under the Direct Loan program?
    •    *Answer: If the lender is able to make the disbursement prior to July 1, 2010, the lender may choose to do so. The
         Department of Education has stated that a FFELP lender can disburse a FFELP loan if a cancelled first disbursement
         (cancelled prior to or after disbursement) is rescheduled and the rescheduled disbursement can be made prior to July 1,
         2010. If that is not possible, the school must originate a new loan under the Direct Loan program.
    •    Question: If a FFELP Stafford loan is first disbursed prior to July 1, 2010, and later a reallocation of funds is needed, is
         this allowed?
    •    *Answer: Yes. A reallocation between the subsidized and unsubsidized loans may take place on or after July 1, 2010,
         if both the subsidized and unsubsidized loans were first disbursed before July 1, 2010 and both those loans stand (were
         not cancelled but rescheduled and disbursed prior to July 1, 2010). However, if the Stafford Loan first disbursed to the
         borrower was only a Subsidized Loan or only an Unsubsidized Loan, such a reallocation may not take place after July 1,
         2010.

    **Please note that any reallocation involving the creation of a loan type after July 1, 2010 will not be allowed. This
    includes changing a loan completely from SF to SU or SU to SF.


•       Question: The first disbursement of a FFELP loan is made prior to July 1, 2010. A second
        disbursement is scheduled to be made on August 25, 2010. The school returns the first
        disbursement on July 15, 2010. Will the lender be allowed to make the second and any
        subsequent disbursements of the FFELP loan?
•       *Answer: No. The final first disbursement (transfer of funds to the school ) must take place
        prior to July 1, 2010 for the remainder of the loan to be made (disbursed) as a FFELP loan.
        If a cancelled first disbursement can be rescheduled and the rescheduled disbursement takes
        place prior to July 1, 2010, the remaining FFELP disbursements may take place. However,
        the final first disbursement (original or rescheduled) also must “stand” for the remaining
        disbursements to be made as FFELP disbursements. In this case, the first disbursement
        meets the pre-July 1, 2010 requirement, but is cancelled after July 1, 2010. Under these
        circumstances, the lender must cancel the second and all subsequent disbursements of the
        loan.

**When a school cancels a 1st disbursement on KLAS or Zip Access and the remaining
disbursements are scheduled on or after July 1, the school must cancel the remaining
disbursements. When KHEAA cancels the first disbursement at the request of a school or
borrower, KHEAA will cancel future disbursements.


                                                               5
•    Question: The first disbursement of a FFELP loan is made prior to July 1, 2010. The second disbursement is made on
     August 5, 2010. The school returns and cancels the first disbursement on August 15, 2010 after the second disbursement
     is made. How should the school handle this situation?
•    *Answer: If a school must return and cancel the first disbursement after June 30, 2010, it must also return any other funds
     for the loan that have been disbursed to the school and cancel any other pending disbursements for the loan. The school
     may then be able to originate the loan under the Direct Loan program.

**KHEAA will monitor this scenario when possible and notify the school if additional funds need to be returned.

•    Question: If the first disbursement of a FFELP loan made prior to July 1, 2010 is returned on or after July 1, 2010, must
     subsequent disbursements of the loan also be made prior to July 1, 2010 be returned?
•    Answer: No.

For Schools That Only Disburse on Certain Days of the Week

Question: If a school certifies a FFELP loan prior to July 1, 2010 and the first disbursement date is scheduled to occur prior to
this date, but because of the school’s disbursement preferences with KHEAA, the next scheduled disbursement day available
to that school is on or after July 1, 2010, can the loan be disbursed to the school? (For example, a school has requested to have
their disbursements occur only on Thursdays but June 30, 2010 is a Wednesday.)
Answer: No, KHEAA could not make the disbursement since it would disburse on or after July 1, 2010.

**KHEAA will attempt to monitor this scenario and will notify the school of any adjustments that need to be made.

Entrance and Exit Counseling

•    Question: Do FFELP Stafford and student PLUS loan borrowers need to complete entrance counseling prior to their
     receipt of any Direct Stafford or student PLUS loans?
•    Answer: According to §685.304(a)(1) & (2), entrance counseling is not required prior to the delivery of a first Direct
     Stafford Loan if the student borrower has previously received a Federal Stafford or SLS loan, or prior to the delivery of a
     first Direct PLUS loan if the student borrower has previously received a Federal student PLUS loan.
•    Question: Are borrowers with both FFELP and Direct loans required to complete both FFELP exit counseling and Direct
     loan exit counseling?
•    Answer: Not necessarily. The Department has previously stated that borrowers with loans from both programs may
     complete either FFELP or Direct loan exit counseling, provided the counseling materials addressed the required elements
     from both programs.




Thank you again for your tremendous support. We look forward to working with you to serve students for many years to come.
              Please don’t hesitate to contact us if you need any assistance with the transition. 800.928.8926


                                                           6
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                                              7
Student Loan Marketplace
                                                                                  powered by:
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                 PRIVATE LOAN PREFERRED LENDER LISTS
Under HEOA Section 601, you           choose their lender based on brand        (instructions provided).
have limited options to help          recognition without comparing         In addition to serving as your
students with private loans and       loans and benefits. Students may       private loan preferred lender list,
comply with onerous Preferred         waste thousands of dollars in         the Marketplace also provides:
Lender Arrangement regulations.       interest payments.                    • Meaningful information that
                                                                                students need to make an
To help you decipher and comply       The third option you have is to           informed decision.
with the new private loan             offer no guidance on private loans.   • A straightforward path
requirements, the Student Loan        Without help from you, students           towards compliance with
Marketplace provides meaningful       are left to find their own funding         Section 601 regulations.
information for your students and     from search engines and direct-to-    • Required disclosures and
offers you an easy path to HEOA       customer marketing which can be           Code of Conduct.
compliance.                           misleading.                           • Standardized lender selection
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The first option under HEOA            The fourth option is to have a        • One click to download and
Section 601 involves the RFP          third-party lender list such as           print annual report
process and extensive Section 601     Marketplace. Setting up the           • Virtually no increase in
disclosures. You must keep up-        Marketplace as your Preferred             school burden.
to-date with the changing lending     Lender Arrangement is simple:         • Obtained opinion from
landscape.                            • Add the suggested link to               outside legal counsel that
                                           your website directing your          schools using Marketplace
Option two is to have a preferred          students to the Marketplace.         are compliant.
lender list that simply provides      • Provide Overture with your          • Opinion that school is
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school in the past 3 - 5 years.       • Once a year your school’s
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an overwhelming list of lenders            for you to mail to the           Marketplace, please contact your
and it is likely that students will        Department of Education           KHEAA representative or call
                                                                                    866.638.7524.




         Know.                                Compare.                                 Decide.



                                                 8
E               nhanced                        KHEAA.com
                                                  Will Succeed GoHigherKY.org
Beginning July 1, KHEAA will replace GoHigherKY.org with a new feature-packed kheaa.com. Enhancements to kheaa.
com began in April, with even more improvements scheduled in the upcoming months.

The change is being made to provide a single source for information about college planning and student financial aid.
The “Students and Parents” section of kheaa.com now
includes information formerly under GoHigherKY.
org’s tabs for:

•    Planning for College
•    Selecting a College
•    Paying for College

On the KHEAA home page, click on Students and
Parents. A list of links will appear on the left-hand side
of the page.

In addition to the new links listed above, you’ll find
detailed information about:

•    Grant Programs for Kentucky Residents
•    Federal Grant Programs
•    Scholarship Programs for Kentucky Residents
•    Work-Study Programs
•    Student Loan Programs
•    Conversion Scholarship/Loan Programs
•    Tuition Waiver Programs
•    Savings/Prepaid Tuition Programs
•    Money Management
•    Your KHEAA College Connection Newsletters                   Some publications are available only online, while others may be
•    Publications                                                ordered using an online ordering page.

Similar improvements have been made to the “Adult                Students may continue to use their GoHigherKY.org account user
Learners” section of kheaa.com. It also discusses                name and password to access their information via the
why adults might want to consider going to college,              federal MyFSA website at https://studentaid2.ed.gov/xap_pack/
possible careers and resources specifically for adults.           Default.asp. With MyFSA, students can create a
The Publications links will take you to KHEAA’s                  personal portfolio to store and retrieve their financial aid
college-planning publications, which include:                    information, add colleges they are interested in attending, explore
                                                                 careers and much more.
•    The College Circuit
•    Getting Started (for high school freshmen)
•    Getting Set (for high school sophomores)                    KHEAA appreciates the support of GoHigherKY.org over the years
•    Getting Ready (for high school juniors)                     and with the implementation of new features at kheaa.com, we hope
•    Getting In (for high school seniors)                        to provide even better services to Kentuckians.
•    Adults Returning to School
•    Affording Higher Education (information about               If you have any questions or comments regarding the website,
•    some 5,000 sources of financial aid for Kentucky             please call our Customer Care staff at 1.800.928.8926 by
•    students)                                                   choosing “0” at the options menu.
•    It’s Money, Baby (financial literacy)



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