Download - Federal Loan Servicing

Federal Loan Servicing

Brenda Cox, UHEAA/CornerstoneWanda Hall, Edfinancial

Matt Stover, Nelnet

Federal Loan Servicers• Aspire Resources Inc.• CornerStone• ESA/Edfinancial• FedLoan Servicing (PHEAA)• Granite State – GSMR• Great Lakes Educational Loan Services, Inc.• MOHELA• Navient (formerly Sallie Mae)• Nelnet• OSLA Servicing• VSAC Federal Loans

Key Events

• March 31st letter from the Department of Education to Senator Harkin• Establish Common Performance Metrics• Incentive Based Pricing• Provide Not For Profit Servicers Additional Volume• Move Towards Comparable Portfolios Across Servicers

Key Events

• June 9th 2014 – President Obama Delivers Speech on Student Loan Debt• Expands the Pay As You Earn Program• Focus on borrower satisfaction and repayment• Negotiated Rulemaking starts in early 2015 to expand

Pay As You Earn

Metric Changes

• Contract changes incorporated into Title IV Additional Servicers (TIVAS) and Not For Profit Servicers (NFPs) servicing agreements• All Federal servicers will be measured under a

common set of performance metrics

Outreach

• Third-Party Debt Relief companies • In grace period and owe more than $25K• Delinquent borrowers

• 90-180 days delinquent• 181-270 days delinquent

• Undergraduate borrowers with higher-than-average debts• > $50K and entered repayment prior year

• Borrowers in deferment and forbearance because of financial hardship or unemployment•

Outreach

• Campaign target outcome:• Improve awareness of IDR• Increase application and adoption of IDR plans• Reduce borrower delinquency and default

• Visit repayment estimator tool• Apply for IDR• Contact servicer to apply for IDR• 80% of opened emails opened within 24 hours• Negligible after 36 hours

Outreach

• Preliminary Results• 90-180 days delinquent

• 15.63% made a payment; 2.54% IDR• 181-270 days delinquent

• 12.48% made a payment; 2.05% IDR• Owe $50+ and left school within 1 year

• 36.73% made a payment; 9.41% IDR• Deferment and forbearance

• 34.61% changed to in repayment• Grace and owed more than $25K

• 12.94% IDR

Trends

• Total outstanding student loan debt has more than doubled since 2007 by approximately 85%• Outstanding student loan debt has shifted from

FFEL to Direct Loans• 2007 DL 21%• 2014 DL 62%

2014 Release of FSA Data by IHEP

Trends

• Majority of outstanding loans/borrowers are currently in repayment• Grace 5%• Repayment 58%• Deferment 14%• Forbearance 13%• Loan dollars in default 10%

In loan dollars

Trends • 13% of borrowers enrolled in IDR• Standard repayment 10 years or less: 61%• Standard repayment more than 10 years: 9%• Graduated more than 10 years: 2% • Income-driven: 13%

• IBR 9%• ICR 3%• PAYE 1%

• Alternative: 2%• Other: 3%

By Borrower

Trends

• 74% of Direct Loans in repayment are being repaid• Nearly ½ of loan dollars not paid on-time are less

than 91 days delinquent• Current repayment 37%• 31-90 days delinquent 3%• 91-180 days delinquent 2%• 181-270 days delinquent 1%• 271-360 days delinquent 1%• Transferring to DMC <1%

Standardization Efforts

• Interest capitalization• Due diligence• SCRA• Credit reporting• Payment application• Reaffirmation letter• Proof on income documentation

Customization

• ONE-SIZE DOESN’T FIT ALL• Portfolio analysis• Technology available• Borrower demographics

• Age of portfolio• Age of borrowers• Where reside• Type of school attended• Length of attendance

Customization To Better Serve Borrowers • Edfinancial Services • IDR campaigns – emails and postcard reminders of need

to recertify for IDR (upcoming or past)• Email notification that received correspondence• Email notification that processed correspondence• Delinquency driven email and call campaigns • Age driven correspondence – “New and Edgy”• 100 Club – All hands on deck – Own accounts

Customization To Better Serve borrowers• Nelnet• Borrower communication channels• Enhanced communication• Document submission capabilities• Web/Mobile interfaces

Customization To Better Serve Borrowers• UHEAA/Cornerstone

• Borrower Centric

• Targeted Communications

• Innovation & Resource Usage

• Quality Control

• Training & Professional Development

NFP’s Eligibility for common origination and disbursement (cod)

• FSA Change Request Outlined Requirements

• Intersystem Testing Scheduled Beginning Fall

• Servicers Begin Receiving New Loans in January

• Small Initial Allocation Pool

Consolidation update

• New process starting January 1st, 2014• Joint session between TIVAS and GA community to

discuss issues.• Issues must be addressed when moving from one

provider to multiple providers

Consolidation update

• Inclusion of collection costs if the LVC is not received.• Invalid fields or naming conventions causing file

load errors.• Pending changes for overpayments.

Total and Permanent Disability Discharge (TPD) Update

• Since July 1, 2013 (effective date of new regulations)• Intents to apply – 299K• Application initial review – over 226K• Outgoing correspondence – over 1.5M• Borrowers approved – over 162K

• New SSA method for qualifying for TPD has represented 15-20% of the monthly FSA approvals

Thank you!

Download - Federal Loan Servicing

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