National Direct Student Loan Coalition

National Direct Student Loan Coalition Presents Choosing the Direct Loan Option The Federal Student Loan Delivery System Whose Time Has Come National Webinar, August 1, 2007 Introduction -Roberta Johnson, Chair NDSLC and Director of Financial Aid at Iowa State University Presentation -Craig Munier, Past Chair NDSLC and Director of Financial Aid at University of Nebraska Lincoln With special thanks to our Webinar Host, AACRAO Agenda  What is Direct Lending? Historical perspective Why DL? Why now?    What must a school do to move to Direct Lending? What Is Direct Lending?  Created by Congress in 1992 as a replacement for the Federal Family Education Loan Program (FFELP) Legislative Goals: Simple, one-stop-shopping for students’ aid  Significant taxpayer savings  Streamlined processing at schools   Historical Perspective     93-94: 104 Schools enter DL for Year 1 95-96: 1,263 Schools are DL schools— 33% of total student loan volume Student Loan Reform Act of 1993: Congress decides to keep 2 loan programs based on industry lobbying DL is the largest single source of federal student loans in the nation DL is the Better Choice  For Students For Taxpayers For Schools   Better for Students     DL has the same statutory benefits as FFELP Loans never sold – one source to borrow and repay  In last 4 years, FFELP loans sold on average 2.5 times!  Cohort default rate is 20% lower in DL .25% interest reduction with EFT Income Contingent Repayment available in DL Consolidation, not in FFELP     No ―strings attached,‖ illusory benefits as in FFELP that require 24 to 48 months on time payments (where less than 1% qualify) DL fee reduction only requires 12 on time payments to retain Interest is capitalized less frequently in DL than is the normal practice in FFELP Late fees are less punitive than the maximums allowable and assessed in FFELP Better for Schools       Simple Easy Less costly to administer with fewer staff needed, reducing pressure on tuition increases Better customer service Easy to make changes to loans after origination Processing = Pell with a Promissory Note  No profit motive for middlemen means DL is inherently not subject to unethical and/or illegal activities between FFELP profit centers and school administrators Better for Taxpayers  The Research:     The Results:      GAO (Government Accountability Office) CBO (Congressional Budget Office) OMB (Office of Management and Budget) Presidential Budgets every year since DL’s inception US Pirg NBER (National Bureau of Economic Research) Heritage Foundation   DL is cheaper than FFELP - $10 for every $100 loaned Cohort Default Rate in DL is 20% lower than in FFELP DL is ethical program not prone to illegal or questionable behaviors by lenders and/or school personnel Moving to DL  Full Directions at:  http://www.ed.gov/offices/OSFAP /DirectLoan/index.html Step One  Get federal approval to participate   If you already participate in PELL, you are nearly done with the federal application Change Program Participation Agreement (PPA)  Check if DL is already on your school’s Eligibility and Certification Approval Report (ECAR) - PPA  If not, go to ―E-APP for Schools‖ Web site www.eligcert.ed.gov  Add DL as a program in which you wish to participate Step Two   Once your PPA is adjusted to include DL and your request is approved: E-mail participation request to:  CODSupport@acs-inc.com School name, address, and phone # Requestor’s name, e-mail, and phone # Award Year COD ID (8 digit #) DUNS # OPE ID (8 digit #)  Include:     ED sends school its approval after review Step Three  Decide how your school will process Direct Loans:  1. Use EDExpress, free software provided by the Department. If you choose to use EDExpress software, you can download the most recent version of the software and related documentation. Questions: contact Central Processing System (CPS) Technical Support at (800) 330-5947. (Training is available from the Department on this software at regional offices, at conferences, and on web.)  2. Use Banner, Peoplesoft, or other mainframe vendor’s system for processing DL  3. Develop your own Direct Loan software using the technical specifications found in the COD Technical Reference available on www.fsadownload.ed.gov OR  4. Use a Third Party Servicer. Step Four  Update your SAIG agreement to include DL processing   contact the SAIG customer service staff at (800) 330-5947 or visit their website at https://www.fsawebenroll.ed.gov/PMEnr oll/index.jsp Step Five Set up your school to receive Direct Loan funds via the Department's Grant Administration and Payment System (GAPS)  Bank account information must be in GAPS. Visit the GAPS website or call the GAPS Hotline at (888) 3368930 for instructions.  You must submit a new direct deposit form, Form SF1199A (available at your bank), to receive Direct Loan funds even if you will use the same bank account as your other Title IV funds.  If you already have a valid GAPS user ID and password, you do NOT need to request a separate one for Direct Loans. Step Six  Contact COD School Relations at (800) 848-0978 or codsupport@acs-inc.com to reach your primary Customer Service Representative (CSR).  Add Direct Loan contact information  Sign up to receive Direct Loan bulletins via e-mail  Select your Direct Loan report options  Establish your promissory note process (paper or electronic)  COD Training at: http://www.ifap.ed.gov/eannouncements/1007CODU pdatedCBTDoc.html Step Seven  Sign up to receive Direct Loan listserv messages.  To join, send an e-mail request to David Hebrank (david.hebrank@ed.gov) on the Direct Loan Operations team. The request should include your name and school, complete e-mail address, and a request to be added to the listserv. Step Eight Help from other DL Schools   Direct Loan school contacts: School Platform Contact Person Phone 515-2940109 508-5651076 510-6426819 616-3957765 Type Iowa State University Stonehill College University of California Berkeley Homegrown EdExpress Sigma's SAMS system Roberta L. Johnson Janice Lindstrom 4-year public 4-year private Roberta C. Johnson Carla Bender Julie Cole Nancy Hoover 4-year public 4-year private Hope College University of Michigan Denison University Banner People Soft Banner 734-6473716 740-5876629 219-4646886 513-5298555 402-4724001 4-year public 4-year private 4-year private 4-year public 4-year public Valparaiso University Miami Univ. of Ohio University of Nebraska Datatel Banner SCT SisPlus Phyllis Schroeder Chuck Knepfle Craig Munier Univ. of Minnesota People Soft M.E.G. Schmidtbauer 612-6240824 4-year public Other Useful Sites  Common Origination and Disbursement: www.cod.ed.gov Direct Loan Servicing: www.dl.ed.gov Direct Loan Consolidation:   www.loanconsolidation.ed.gov  Direct Loan Software and Reference Material: www.fsadownload.ed.gov National Direct Student Loan Coalition www.altrue.net/site/ndslc  National Direct Student Loan Coalition Choosing the Direct Loan Option QUESTIONS????? National Webinar, August 1, 2007