Session DL-02

Direct Loan ServicingFundamentals

Cynthia BattleU.S. Department of Education

2

Agenda

• Direct Loan Servicing Update Facts and Figures CCRAA Changes Outreach Activities Customer Satisfaction Survey

• Direct Loan Servicing Borrower Tools

• Direct Loan Servicing School Tools

3

Portfolio Statistics

6.6 Million Active BorrowersTotal Direct Loan Borrowers

5,400,000

5,600,000

5,800,000

6,000,000

6,200,000

6,400,000

6,600,000

6,800,000

2003 2004 2005 2006 2007 2008

PopulationStatus

In School

In Grace

In Repayment

1,526,111

352,859

3,567,185

In Deferment 713,705

In Forbearance 498,422

4

Portfolio Statistics

5

Direct Loan Payments

For the month of June 2008, the percentage of borrower payment transactions received in paper format by the DLSC was only 38.2%.

0%

10%

20%

30%

40%

50%

60%

70%

Jun

-04

Jul-

04

Au

g-0

4

Sep

-04

Oct-

04

No

v-0

4

Dec-0

4

Jan

-05

Feb

-05

Mar-

05

Ap

r-0

5

May

-05

Jun

-05

Jul-

05

Au

g-0

5

Sep

-05

Oct-

05

No

v-0

5

Dec-0

5

Jan

-06

Feb

-06

Mar-

06

Ap

r-0

6

May

-06

Jun

-06

Jul-

06

Au

g-0

6

Sep

-06

Oct-

06

No

v-0

6

Dec-0

6

Jan

-07

Feb

-07

Mar-

07

Ap

r-0

7

May

-07

Jun

-07

Jul-

07

Au

g-0

7

Sep

-07

Oct-

07

No

v-0

7

Dec-0

7

Jan

-08

Feb

-08

Mar-

08

Ap

r-0

8

May

-08

Jun

-08

Jul-

08

Borrower Checks EDA Direct Loan Web Aggregator Web

July 2008

Checks – 35.2%

EDA – 35.8%

Direct Loan Web – 18.7%

Aggregator Web – 10.3%

6

16111 13163

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

2007 2008

Electronic Service Programs

Electronic Services

Electronic Bill Presentment

Only

Electronic Bill Presentment + Correspondence

Electronic Correspondence Only

Electronic Correspondence + Electronic Debit Account

Electronic Debit Account Only

The Direct Loan Servicing program just celebrated over 2 billion dollars processed through the web site since

online payments were made available, not including third party payments. Over 8,281,679 transactions have been

processed with an average value of $241.91.

7

Delinquency

8

Consolidation Peak Planning

Capacity Planning included:• Application volume forecasting based on

previous year’s data• Analysis of the interest rate trends and

forecasting interest rates that would be in effect for July 1

• Adding additional systems capacity to receive web applications

• Adding additional call center representatives and back office workers to handle a small volume increase that was forecast

9

Consolidation Peak Planning

Results: • This year’s summer consolidation peak was very

small, as forecast. Decreases in interest rates, as occurred this year, usually cause increases in applications after July 1 when the interest rate changes

• We have seen an increase application volume since July 1

• We were able to handle volumes in all operational areas without problem

10

Loan Consolidation Peak• Loan Consolidation

– LC bookings decreased in June because we held loan applications to allow borrowers to take advantage of the falling interest rates

– The total June/July 2008 bookings of 41,720 exceeded the 2007 volume by 12,638 for the same two-month period

11

• Direct Loan Servicing Update Facts and Figures CCRAA Changes Outreach Activities Customer Satisfaction Survey

• Direct Loan Servicing Borrower Tools • Direct Loan Servicing School Tools

12

CCRAA / Regulatory Changes

• Military Deferment• Public Service Forgiveness• Economic Hardship• Total and Permanent Disability

13

CCRAA / Regulatory Changes

• TEACH Grant• Income Based Repayment (IBR)

– effective July 1, 2009

• ICR for Graduated PLUS– effective July 1, 2009

14

• Direct Loan Servicing Update Facts and Figures CCRAA Changes Outreach Activities Customer Satisfaction Survey

• Direct Loan Servicing Borrower Tools • Direct Loan Servicing School Tools

15

Delinquency Management

• Pre-Repayment Counseling• Calls made two months prior to entering

repayment• Emails sent to assist with repayment options

• Delinquency Counseling– 31 days we begin a series of calls (22 calls)– Letters begin at 7 days delinquent (12)

• Call Campaigns- High balance calls (balance of 80K or greater)

16

• Direct Loan Servicing Update Facts and Figures CCRAA Changes Outreach Activities Customer Satisfaction Survey

• Direct Loan Servicing Borrower Tools • Direct Loan Servicing School Tools

17

Customer Satisfaction Survey

• 250 interviews of Direct Loan Servicing customers conducted by phone from 7/11/08 through 7/20/08

• 100 Electronic Debit• 100 Paper • 50 E-Bill customers

• Results weighted in proportion to customer population

• 64% Paper• 5% E-bill• 31% Electronic Debit

18

2008 Direct Loan Servicing Model

Confidence

Customer SatisfactionIndex

Complaints

Call CenterRepresentative

CourtesyWillingness to help

KnowledgeAbility to answer your questions

Time to resolve inquiryOperating hours of service center

Website

Ease of logging inClarity of organization

Ease of navigatingAccuracy of information

Ability to find information you neededUsefulness of website tools

Electronic DebitAccuracy

ConvenienceReliability

Voice ResponseUnit

Clarity of menusEase of using the systemTime it takes to navigate

System’s ability to answer questionsAbility to accomplish what you want to

Statements

Accuracy of balanceAccuracy of information about past payments

Ease of reading the statementAmount of information provided

Consistency in when you receive statementsAmount of time given before payments due

Overall satisfactionSatisfaction compared to expectations

Satisfaction compared to ideal

Customer Satisfaction Survey - 2008

19

Customer Satisfaction Survey

Score

Impact

Confidence

Customer Satisfaction

Complaints

Statements

Website

Voice ResponseUnit

Call CenterRepresentative

87

3%

92

87

72

80

0.0

0.3

1.1

1.5

80-1.4

3.0

Electronic Debit

94

2.4

20

80

87

80

91

90

84

83

68

87

79

92

90

81

83

78

863%

72

80

87

92

94

4%4%

0 10 20 30 40 50 60 70 80 90 100

Customer Satisfaction

Electronic Debit

Statements

Website

Call CenterRepresentative

Voice Response Unit

Confidence inDepartment of Education

Complained aboutrepayment process (%)

2008 2007 2006

Satisfaction levels holding steady

=Significant Difference vs. 2007

21

Satisfaction Benchmarks Federal Government

DL Servicing remains among the highest satisfaction services in the Federal Government

67

78

80

80

80

68

85

72

71

68

78

40 50 60 70 80 90

GSA e-Buy

TreasuryDirect.gov

GSA Advantage!

IRS Electronic Filers

FMS / LaRS

FAFSA on the Web

FSA Direct Loan Servicing

US Mint Online Catalog

Social Security Business Svcs. Online

Federal Government E-Gov Index

Federal Government

ACSI Score

22

Satisfaction Benchmarks Private Sector

DL Servicing has satisfaction levels comparable or superior to private sector financial services

72

82

82

75

80

79

78

88

50 60 70 80 90

Bank of America

Wachovia

Charles Schwab

Amazon.com

FSA DL Servicing

ACSI Banks

ACSI E-Commerce

ACSI (Overall)

ACSI Score

23

Survey Highlights• Direct Loan Servicing continues to garner

very high levels of customer satisfaction

• Call Center Representatives and the VRU remain the key action areas for further improvements

• Score for Electronic Debit are as close to “perfect” as they are likely to get; high impact implies that customers expect FSA to keep it this way

• Website scores up thanks to improved perceptions among Paper statement customers, but some potential “early warning” signs from E-Bill customers

24

• Direct Loan Servicing Update Facts and Figures CCRAA Changes Outreach Activities Customer Satisfaction Survey

• Direct Loan Servicing Borrower Tools • Direct Loan Servicing School Tools

25

Benefits to Borrowers• Repayment incentive• Repayment options tailored to individual need (Standard,

Extended, Graduated, Income Contingent, Alternative Repayment)

• Payment due date selection by borrower• Options for receiving bills and/or correspondence

electronically • Electronic Payments (EDA and on-line)• Self-Service tools for borrowers

(telephone voice response system, Web portals)• Online form submission with electronic PIN signatures (forbearance, deferments, EDA, FAFSA)• Loan Consolidation

26

Direct Loan Servicing Web Sites

For Borrowers - www.dl.ed.gov

• Real Time Account Information• Online Transaction Processing - Borrower Self-Service• Online Counseling and Rules Based Messaging• Interactive Pre-qualifier for Deferment and Forbearance

Requests including online submission with eSignatures• Online payments• Electronic Mail Services• EDA Enrollment• Online Calculators• Online Surveys

For Schools - www.dl.ed.gov/schools

• Student Account Lookup• Online Reports – Portfolio, Delinquency and Counseling• Complete Question Center

For Borrowers - www.dl.ed.gov

• Real Time Account Information• Online Transaction Processing - Borrower Self-Service• Online Counseling and Rules Based Messaging• Interactive Pre-qualifier for Deferment and Forbearance

Requests including online submission with eSignatures• Online payments• Electronic Mail Services• EDA Enrollment• Online Calculators• Online Surveys

For Schools - www.dl.ed.gov/schools

• Student Account Lookup• Online Reports – Portfolio, Delinquency and Counseling• Complete Question Center

27

Key Features

•Highly Secure PIN protected Data encryption

•Section 508 Compliant for borrowers with disabilities

•English/Spanish option for entire site

•Online Tour – tutorial to aid borrowers in using site

•Search Feature & Site Map helps borrowers find what they need quickly

Borrower Web SiteHomepage – dl.ed.gov

28

Borrower Web SitePersonalized Online Messages

Key Features

•Personalized messages are displayed to borrowers based on their account status and other information.

• Messages include information about last and next payment, options for delinquent borrowers, and special information as the need arises.

29

Borrower Web SiteAccount Summary

Exit Counseling

Click here to view your Non-Direct Loans

Borrowers are provided with the amount of their

total indebtedness

(Direct Loans, FFEL, and

Perkins) during Exit Counseling

or from the Account

Summary page.

30

Borrowers may select one of our four repayment plans:

•Standard•Extended•Graduated•Income Contingent Repayment (ICR)

Borrowers may also select from any of the four available due dates: 7th, 14th, 21st, or 28th

Borrower Web SitePayment Due Date

31

Direct Loan borrowers can receive their bills and make payments online; and they can choose to receive their Direct

Loan correspondence electronically, all for free.

                   

Borrower Web SiteBills and Payment

32

Borrower feedback:

I just wanted to congratulate you on providing an excellent way to manage my student loan account. I cannot tell you how much simpler it is for me, knowing I can do everything I need on-line. I don't have to mail anything or call someone -- I just need to log in.

- Troy

Over 1MILLION borrowers are receiving a .25% incentive

by enrolling in EDA!

Borrower Web SiteElectronic Debit

33

Borrowers can submit Unemployment Deferment and General Forbearance

applications online.

Borrower Web SiteOnline Form Submission

34

Borrower Web SiteEntrance and Exit Counseling

35

• Direct Loan Servicing Update Facts and Figures CCRAA Changes Outreach Activities Customer Satisfaction Survey

• Direct Loan Servicing Borrower Tools • Direct Loan Servicing School Tools

36

School Web SiteHomepage – dl.ed.gov/schools

37

School Web SiteWelcome Page

38

Click here to see Repayment Estimates

School Web SiteStudent Account Lookup

39

            

                                 

School Web SiteEntrance and Exit Counseling Reports

40

            

                                 

Summary Delinquency Report

Late Stage Delinquency Report

School Web SiteDelinquency Reports

41

Contact Direct Loan School Services

1-888-877-7658 (School Services)www.dl.ed.gov/schools

• 30-day Demand Letters• Cohort Default Assistance• Delinquency Management Assistance• Exit Counseling Interview Materials• NSLDS/Clearinghouse • SSCR/Student Enrollment • Account Status• Web Assistance

42

Contact Information

Thank You!

We appreciate your feedback and comments.

Cynthia Battle

Phone: (202) 377-3261Email: Cynthia.Battle@ed.gov