session # 74 loan servicing update
Post on 02-Jan-2016
Embed Size (px)
DESCRIPTIONSession # 74 Loan Servicing Update. Sue O’Flaherty Cynthia Battle U.S. Department of Education. Session Agenda. 1. The Servicing Landscape Measuring Performance and Managing Change in Multiple Servicer Environment Looking Back Looking Forward. 2. 3. 4. Background. - PowerPoint PPT Presentation
Session # 74
Loan Servicing UpdateSue OFlahertyCynthia BattleU.S. Department of Education 1Session AgendaThe Servicing Landscape
Measuring Performance and Managing Change in Multiple Servicer Environment
12342BackgroundAuthority that Changed the Federal Loan Programs:
Ensuring Continued Access to Student Loans Act (ECASLA)Secretary runs two main programs under ECASLA:Loan Purchase Program (PUT)Conduit
Health Care and Education Reconciliation Act of 2010 (HCERA)The Student Aid and Fiscal Responsibility (SAFRA) Act:Ended new loans under the Federal Family Education Loan (FFEL) ProgramRequired the Secretary to contract with not-for-profit servicers
33Our Federal Loan Servicers must comply with all legislative and regulatory requirements.Through the multi-servicer, borrower-centric approach schools may experience different processes and procedures offered by the servicers. Schools see many; but Borrowers see ONE! The competitive structure of the servicing contracts allows for more innovation and creativity. Together with our servicing team, we will work to serve borrowers and schools as efficiently as possible to: Educate and inform regarding the tools and options available to assist borrowers in the management of their student loansOffer multiple repayment options tailored to borrower preferences (i.e. online payments, ACH, check, etc.)Provide self-service tools for borrowers and options to receive bills and/or correspondence electronically
Federal Loan Servicers:44Session Agenda The Servicing Landscape
TIVASTitle IV Additional ServicersTIVAS An acronym used by FSA which stands for the Title IV Additional Servicers. In communications with schools, borrowers, and the financial aid community, FSA uses the term federal loan servicers.155
COD LDE OriginationDisbursement Loan AllocationServicer Assignment Customer Service
COD = Common Origination and Disbursement System CODLDE : Loan Distribution Engine: interface to assign loans to the federal loan servicers.
Booked Loan: occurs when the COD system accepts an origination record; links p-note to the record and accepts actual disbursement.
The federal loan servicer is assigned upon booking of loan. Federal Loan Servicers:* Direct Loan Servicing Center (ACS) Decommission66Federal Loan Servicers:Loan Servicing Information Federal Loan Servicer Team ChangesDirect Loan Servicing Center (ACS) Contract End:Brings closure to the ACS servicers system and contact center for handling the day-to-day servicing of its William D. Ford Federal Direct Loan (Direct Loan) Program loan portfolio.By August 29, 2013 FSA will finish transferring the remaining Direct Loans to FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, or Sallie Mae. The contact center will remain open for a short period of time after transfers have been completed to support transition related activities.
77Federal Loan Servicers:Loan Servicing Information Federal Loan Servicer Team ChangesDirect Loan Servicing Center (ACS) Contract End:Over the next several months FSA will bring closure to other functions performed by ACS (Xerox).
Function Performed by ACS (Xerox)Anticipated Transition Servicing Teacher Education Assistance for College and Higher Education (TEACH) GrantsJuly 22-25, 2013Managing Civil Legal Assistance Attorney Student Loan Repayment Program (CLAARP)August 12, 2013Servicing Direct LoansOngoing through August 29, 2013
Managing Direct Consolidation Loan systemTransition dates being finalized 88Session Agenda The Servicing Landscape
9Not-For-Profit awarded federal loan servicing contracts under the HCERA/SAFRA Not-For-Profit (NFP) Servicer Program solicitation.NFP Not-For-Profit Servicers19NFP Facts:11 Not-For-Profit Servicers (Prime) implemented and awarded federal loan servicing contracts under the HCERA/SAFRA Not-For-Profit (NFP) Servicer Program solicitation.As of April 2013 (due to the Sequestration), the implementation of additional NFPs was placed on hold.
Sequestration Affect on New Not-For-Profit ServicersThe sequester provisions of the Budget Control Act of 2011 limit spending levels in the account used to fund not-for-profit (NFP) servicing operations. In order to stay within these levels, the Department will be unable to bring any additional NFP servicers on board in FY 2013. This includes NFP servicers scheduled for implementation during the remainder of the year and any servicers wishing to join existing servicing teams. The impact of a potential sequester in FY 2014 is unclear at this time but could be a factor in implementation schedules and other decisions regarding NFP activities beyond FY 2013.
Not-For-Profit Servicers1010NFP Servicer NSLDS Name NSLDS Code Aspire Resources Inc.DEPT OF ED/ASPIRE RESOURCES INC.-ISL 503 CornerStoneDEPT OF ED/CORNERSTONE-UHEAA 502 COSTEPDEPT OF ED/COSTEP510EdManageDEPT OF ED/EDMANAGE 505 EDGEucationDEPT OF ED/EDGEUCATION509ESA/EdfinancialDEPT OF ED/ESA-EDFINANCIAL 501 Granite State GSMRDEPT OF ED/GRANITE STATE-GSMR-NH 504 KSA Servicing DEPT OF ED/KSA SERVICING 508MOHELADEPT OF ED/MOHELA 500 OSLA ServicingDEPT OF ED/OSLA SERVICING 506 VSAC Federal LoansDEPT OF ED/VSAC SERVICING511Not-For-Profit Servicers1111When are loans assigned to an NFP servicer? A. Once the NFP has met and demonstrated compliance with all requirements and is deemed qualified and eligible.
Q. Do the NFP servicers perform under the exact same servicing guidelines as the TIVAS?Requirements for the NFP servicers and TIVAS are basically the same. However, they are not exact. For example, NFP servicers do not service newly originated loans from COD.
Q. Which Direct Loan borrower accounts were transferred to the NFPs? We transferred existing Direct Loan borrower accounts currently assigned to the Direct Loan Servicing Center (ACS / Xerox).
Not-For-Profit Servicers1212Q. How will a borrower know if his or her Direct Loans were transferred to a new NFP servicer ?When we transfer a student or parent borrowers Direct Loans from ACS/Xerox to a NFP servicer, the new servicer will correspond with the borrower after the transferred loans have been fully loaded to the system. Additionally, ACS/Xerox notifies the borrower via e-mail they have been transferred and information about the new servicer. The notice usually occurs 1-2 days after the transfer.
Q. Where will the NFPs receive their loans once all of the loans have been removed from ACS/Xerox?A. The current plan is the NFPs will get loan volume from the TIVAS.
Q. How long will the NFPs participate in the program?A. The NFP contracts are for five years with a 5-year additional option.
Not-For-Profit Servicers1313Not-For-Profit Servicers - Transfers1414
Federal Loan Servicers:Servicing Platform Partnerships FedLoan (PHEAA) MOHELA Cornerstone AspireNelnet ESA/Edfinancial Granite State OSLA VSAC 1515Borrowers with federally-owned loans serviced by more than one federal loan servicer.
FSA owns both Direct Loans and FFELP (PUT).(PUT: Loans made under FFELP by lenders and subsequently purchased by ED)
Ongoing processes to resolve situations where a borrowers federally-held loans are assigned to two or more federal servicers.
Federally-owned and commercial loans may still be split among servicers.
Consolidation sometimes viable option, but not in all circumstances.
Goal: All of a borrowers federally-owned loans will be maintained by a single servicer.
Split Servicing 1616Session AgendaMeasuring Performance and Managing Change in Multiple Servicer Environment
217Allocations based on rankings Survey results Default statistics
Most points for first placeOne point for last placeMeasuring Performance Percent of new loans = percent of points 18#18Oversight and Monitoring FSA provides oversight of servicer activities through monitoring to ensure that there is proper attention to customer service, operational processes, servicer requirements, and adherence to applicable regulations.
Monitoring Activities include (but not limited to): Process and Operational Monitoring Weekly Issue Tracking and Resolution Meetings Program Compliance Reviews Call Monitoring Internal & Financial Controls Audits Monthly Data Reconciliation 1919Managing Change Multi-Servicer EnvironmentRequirement changes evolve from regulatory changes, policy updates, and new business decisions.
2020Remember Changes made to servicing platforms (systems)FedLoan (PHEAA) MOHELA Cornerstone AspireNelnet ESA/Edfinancial Granite State OSLA VSAC Servicer Requirements
Managing Change Multi-Servicer Environment21Campus Partner EdManage COSTEP KSA EDGEucation21
Session AgendaLooking Back Servicing Issues and ChallengesBorrowersSchools Process Improvements Decision to Standardize Process
22322Looking BackServicing Issues and Challenges
2323Looking BackServicing Issues and Challenges
Transfer and Payment Processing Challenges:
Why did my loan get sold to a new servicer? Notification of transfer Loan status discrepancies Payments made to prior servicer not applied timely
2424Looking BackServicing Issues and Challenges
Understanding Income-Driven Repayment Options and Consolidation:
Confusion about repayment options Application and documentation requirements Selecting PAYE for new consolidations 2525Looking BackBorrowers: Key Improvements
Redesign of on-boarding communications Coordination and collaboration with previous servicer Extended call center hours for problem resolution Experienced and dedicated resource