cynthia battle | dec. 2014 u.s. department of education student loan servicing summit special...
TRANSCRIPT
Cynthia Battle | Dec. 2014
U.S. Department of Education
Student Loan Servicing Summit
Special Programs
Total and Permanent Disability (TPD) TEACH Grant Public Service Loan Forgiveness (PSLF) Open Forum (TPD, TEACH, and PSLF) Direct Loan Consolidation Open Forum (Consolidation)
Session Format Session Format
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TPD – Major “Shift”TPD – Major “Shift”Historically, TPD processing was one of the major categories of customer service issues tracked by the Ombudsman office.
Over the past few years, there was a substantial shift in the operational process resulting in significant decline in customer issues. Research cases for TPD declined by 34.3 percent in FY14 when compared with the prior year.
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TPD – Major “Shift”TPD – Major “Shift”Factors that contributed to the decline in TPD cases and process improvements:
New regulations effective July 1, 2013, allowed borrowers seeking TPD discharge to apply with a single application directly to FSA
A streamlined application process for some recipients of disability benefits through the SSA
Improved process for TPD with focus on customer service Redesign and informative web pages which includes online
application processDedicated call center where our servicer worked to reduce
the barriers to TPD application and assist borrowers and their physicians in navigating the application process
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Key Projects and Planned Key Projects and Planned Improvements for 2014-15Improvements for 2014-15
Continue improving customer experience Decrease TPD application processing time Evaluate reinstatement process Borrower communication improvements Industry education on TPD process
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TEACH Program Implementation at FedLoan Servicing• July 2013 Implementation
All new TEACH Grants began disbursing directly to FedLoan
• August 2013 ImplementationAll existing TEACH Grants transferred to FedLoan Servicing
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Portfolio OverviewPortfolio Overview
Volume Type Total
Unique TEACH Grant Recipients 73,869
TEACH Grants 144,060
TEACH Grant Volumes as of September 2014
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Portfolio OverviewPortfolio Overviewas of September 2014as of September 2014
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Portfolio OverviewPortfolio OverviewTEACH Grant Service ObligationsTEACH Grant Service Obligations
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Key Concerns & Issues 2014Key Concerns & Issues 2014
Recipient Concerns - Program Confusion Misunderstanding Agreement-to-Serve Importance of Certification Response
• Recipient Responsibilities (Demographics)• Withdrawn Recipient Requirements• No New Grant Responsibilities
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Program ChallengesProgram Challenges
Reasons for Conversion1. Recipient Requested – Voluntary (17%)2. Withdrawn Recipient – No response to initial certification requests3. Withdrawn Recipient – Ineligible response to first annual certification requests (unique to withdrawn recipient)4. No response (Both Graduated and Withdrawn)5. Mathematically unable to fulfil obligation
Recipient Request No Time To Cert 64
Cannot Meet Due To No Time Left To Cert 79
Recipient Request Not In Qualified Teach Field 451
Recipient Request Other 601
Recipient Request Does Not Intend To Teach 679
Did Not Certify Intent Or Annual Certification 11,621
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Program Challenges - SchoolsProgram Challenges - Schools
Separation Date Processing• Obligation begins with separation• Differences with Direct Loans• Withdrawn recipients• Graduated recipients• Inactivating enrollment or separation periods
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Key TEACH Grant Efforts & ImprovementsKey TEACH Grant Efforts & Improvements
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1 FedLoan Servicing utilized Pennsylvania State Grant specialists to service program
2 Specialists have intimate Grant-to-loan program knowledge and expertise
3 Creation of TEACH Certification forms (Certification, Suspension, Conversions) to simplify program complexity and challenges
4 Online TEACH Web Products & Services for grant recipients
5 Expanded Quality Assurance on Grant-to-Loan Conversion Review
6 Recipient Behavior Analytics - No New Grant Scenario- Withdrawn/Reenrolled Scenarios
The Public Service Loan Forgiveness Program (PSLF) allows
eligible borrowers to cancel the remaining balance of their Direct Loans after serving full-time at a public service organization for at least 10 years while making 120
qualifying monthly payments after October 1, 2007.
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PSLF – Qualifying PaymentsPSLF – Qualifying Payments
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PSLF – Qualifying Repayment PlanPSLF – Qualifying Repayment Plan
• Income-driven plans are most likely to leave a remaining balance for forgiveness after 120 qualifying payments
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Qualifying Payment Eligibility - Qualifying Payment Eligibility - Repayment Plan BreakdownRepayment Plan Breakdown
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Quarterly Repayment Plan EvaluationsQuarterly Repayment Plan Evaluations Communicate to borrowers on 10-year Standard
payment plans that they will not benefit from PSLF
Communicate to borrowers not on an eligible repayment plan that they are not making qualifying payments
Qualifying Payment EligibilityQualifying Payment Eligibility
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Specialized processing and PSLF counselors
Unique 800# for PSLF inquiries
Intelligent call routing for the primary 800#
Qualifying Payment Eligibility - Qualifying Payment Eligibility - PSLF Customer Support PSLF Customer Support
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Qualifying Payment Eligibility - Qualifying Payment Eligibility - PSLF Escalated IssuesPSLF Escalated Issues
PSLF Issues Number of Qualifying PaymentsIneligible Repayment PlanQualifying Employment ConcernsConsolidation & Loss of Qualifying PaymentsBorrower Confusion
PSLF is 2.2% of FedLoan Servicing’s portfolio, but accounts PSLF is 2.2% of FedLoan Servicing’s portfolio, but accounts for 19% of escalated issuesfor 19% of escalated issues
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Program Visibility - Program Visibility - ECF Processing ECF Processing
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Program Visibility - Program Visibility - Qualifying Employment Types*Qualifying Employment Types*
*Employers with approved ECFs
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Consolidation & PSLFConsolidation & PSLF
132,321 Consolidation Applications*with ‘PSLF Interest’
Borrowers note PSLF interest on 23.4% ** of all Direct Loan Consolidation Applications
Noted interest gives FedLoan unique PSLF counseling opportunities that did not exist until 2014 Direct Loan counseling Repayment Plan counseling Employment Certification Form counseling
*As of 10/20/2014** Comparison based on 564, 397 total Consolidation Applications as of 10/20/2014
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Planned Target Areas in 2015Planned Target Areas in 2015
Increased Visibility and Outreach Communication Improvementso More specificity in ECF denial letterso Revise content on our web products to be more
borrower friendly and take account of what we have learned about PSLF borrower behaviors
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TPD, TEACH, and PSLFTPD, TEACH, and PSLFLet’s talk…Let’s talk…
Open Forum Open Forum
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Direct Loan Consolidation Direct Loan Consolidation Program Update Open Forum
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Borrowers with federal student loans can:Submit applications electronicallyConfirm loans for consolidationChoose a consolidation servicerSelect a repayment plan and submit an Income-
Driven Repayment e-application if desired
““New” Loan Consolidation New” Loan Consolidation Available on StudentLoans.gov
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New Direct Consolidation Loan Process New Direct Consolidation Loan Process www.StudentLoans.gov
With the implementation of our new Direct Loan Consolidation process, we have four consolidation servicers:
Through the completion of the Federal Direct Consolidation Loan Application and Promissory Note, a borrower will confirm the loans that they want to consolidate and agree to repay the new Direct Consolidation Loan
The electronic application on StudentLoans.gov consist of five steps:
1. Choose Loans & Servicer
2. Repayment Plan Selection
3. Terms & Conditions
4. Borrower & Reference Information
5. Review & Sign
FedLoan / PHEAA Great Lakes
Nelnet Navient (formerly Sallie Mae)
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Focus on these steps
Focus on these steps
Key features of the electronic application:
NSLDS lookup performed and information about an applicant’s federal education loans will populate the application
Ability to delay processing of the application if applicant has at least one loan still in grace
Option to choose the federal servicer to complete the consolidation
Ability to select a repayment plan for the consolidation loan. Applicants interested in one of the income-driven repayment plans will be able to complete the electronic request process
New Direct Consolidation Loan Process New Direct Consolidation Loan Process www.StudentLoans.gov
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Challenges… Issues… Problems Challenges… Issues… Problems
XML Data Limitation Issue Partial Loan Display No Loan Display
Standardization of LVC and payment manifests process
Conversion to ACH vs Paper Checks Third Party Firms Promising Debt Relief
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Important to Mention…Important to Mention…Third Party Firms Promising Debt Relief: The emergence of companies using sophisticated marketing tactics targeting student loan borrowers, their parents, service members and their families with promises of easy and instant relief from student loan debt has become a concern for FSASome companies promise assistance with loan consolidations and application for repayment plans designed to help manage the student loan debt—all services available from FSA and loan servicers at no charge to the borrowerReports indicate some companies are collecting personal information, personal identification numbers, and Power of Attorney forms from the borrowers that allow the company to manage the borrowers’ accounts
FSA (through the Ombudsman’s office) is working to use the Web, social media, and other communication channels to make borrowers aware that free assistance is available from their loan servicers, and there is no need to pay any fees, much less exorbitant fees to private companies for assistance
We are continuing to explore what additional steps can be taken to help ensure borrowers are not exploited
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Planned Target Areas in 2015Planned Target Areas in 2015
Solution to resolve XML Data Limitation Issue Consistency of process for LVC Processing times Communication Improvementso Make clearer to Perkins borrowers of the potential
loss of benefits if consolidating Perkins loanso Choice of Servicer – help borrowers with
information in order to make selection
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Open Forum Open Forum
Let’s talk…Let’s talk…ConsolidationConsolidation
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