slide 1© student lending analytics, llc student lending analytics direct lending transition process...

© Student Lending Analytics, LLC

Student Lending AnalyticsDirect Lending Transition Process

May 19, 2010


Flash Survey: Direct Lending Transition Process

Background

Situation: With the July 1st deadline to implement DL looming, this survey seeks to garner feedback from the financial aid community to assess the progress they are making towards the deadline as well as providing feedback to continue to improve the process

Survey Goals– Assess the level of satisfaction of schools transitioning to Direct Lending– Identify ideas to improve the process– Determine the degree to which schools are requesting technical assistance

and their satisfaction with the process– Identify key resources that schools have identified to assist them in the

implementation process– Assess the degree of confidence that schools have in implementing the

process on time



Methodology

Emailed flash survey on May 14th with due date of May 17th 2010

In addition to demographic questions, the survey asked respondents the following questions:– Describe your overall level of satisfaction with the implementation process

to date. – Have you requested additional resources from your "point of contact" or

other Dept. of Education representative to assist you in the implementation process?

• What resources did you request to assist your institution in implementing Direct Lending (please be as specific as possible)?

• Was your request granted?

• How quickly were you able to get a response on whether your request for additional resources would be granted?

– CHECK ALL THAT APPLY. My institution (either myself or other staff members) has already taken the following steps to prepare for Direct Lending:



Methodology

Questions asked (continued):– What single resource has been most helpful to you and your team?– Describe your level of confidence that the factors described below will be

ready by the July 1st deadline:

• Financial aid management systems ability to process Direct Loans

• Student and parent understanding of process changes

• Readiness of other departments on campus (business office, grants, etc.)

– Please describe any other factors that would hinder your institution's ability to implement the Direct Loan program by July 1st.



Methodology (Cont.)

Responses were normalized for following reasons:– Email addresses that did not correspond with an educational institution were

excluded– Several schools provided multiple responses; only one response was

analyzed– Responses that included demographic data but incomplete answers to main

survey questions were excluded

Overall, there were 212 survey responses analyzed– The question that asked the respondents to indicate their level of confidence

in processing a Direct Loan and other issues was redesigned in the middle of the survey so only 62 responses were included in the results



SummaryOverall, 83% of respondents rated their level of satisfaction as “Acceptable” or higher when it came to their direct lending implementation process to date.

Among the most popular financial aid management systems (FAMS), respondents were least satisfied with PowerFAIDS with 67% of respondents rating their satisfaction as “Acceptable” or higher while Banner (91%) and DataTel (90%) were most highly rated.– Home-grown systems also showed low levels of satisfaction (69%)

Graduate programs had the lowest level of satisfaction with only 50% rating their implementation experience as “Acceptable” or higher.

Over 1/3 (35%) of participants have requested additional technical resources to assist in their implementation– While six out of seven requests have been granted, 30% of requests have

not received an answer yet



Summary

In terms of confidence level, survey participants were:– Most confident that they would be able to process Direct Loans by July 1st

with 89% being very confident (50%) or confident (39%) that they would accomplish by this deadline

– Least confident that parents and student borrowers would understand the process changes with only 21% being “very confident” and 58% being “somewhat confident” that they could navigate the shift to Direct Lending

Over 80% of schools have completed these steps to prepare for Direct Lending, while only 16% have hired a consultant– Participated in DL webinars– Reviewed Department of Education’s Direct Lending website– Developed communication strategy for parents and student borrowers

The three most valuable resources for survey participants were peer/mentoring relationships, Dept. of Education (website, webinars and point of contact) and software vendors



Profile of Survey Participants

School Type

0%

10%

20%

30%

40%

50%

4-Year Private 4-Year Public 2-Year Public Other

School Ownership

0%10%20%30%40%50%60%

Private Public Other

Cost of Attendance

0%10%20%30%


SLA Flash Survey: Direct Lending Transition Process

Overall Level of Satisfaction

16%

31%

36%

10%

6%

0%

10%

20%

30%

40%

Very Satisfied Satisfied Acceptable Unsatisfied Very Unsatisfied

Per

cen

tag

e o

f T

ota

l R

esp

on

den

ts

Survey question: Describe your overall level of satisfaction with the implementation process to date. Source: SLA Flash Survey: Direct Lending Transition Process, May 2010



Level of Satisfaction (By FAMS System)

91% 90% 86%84%

69% 67%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Banner DataTel Jenzibar PeopleSoft Home-Grown PowerFAIDS

Per

cen

tag

e o

f T

ota

l R

esp

on

den

ts

Note: Percentage of respondents indicating level of satisfaction as “Acceptable”, “Satisfied” or “Very Satisfied”Source: SLA Flash Survey: Direct Lending Transition Process, May 2010

Sample size: 53 51 7 25 13 45



Level of Satisfaction (By School Type)

90% 88%81%

50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

4-year public 2-year public college 4-year private, non-profit

Graduate program

Per

cen

tag

e o

f T

ota

l R

esp

on

den

ts

Note: Percentage of respondents indicating level of satisfaction as “Acceptable”, “Satisfied” or “Very Satisfied”Source: SLA Flash Survey: Direct Lending Transition Process, May 2010

Sample size: 51 40 99 16



Ideas For ImprovementReporting issues– “It is difficult to tell who has completed MPN and Entrance Counseling

requirements”

Webinar recommendations– “Better detailed instructions versus so many webinars”– “It would have been helpful to learn a process: for example, how to

originate a loan with step by step instructions”– “The trainings should be recorded and on-demand”

Websites– “More up to date information on various DL web sites” – “…One click links to apply for MPN for the student, student friendly

messages on the loan sites.”



Ideas For ImprovementSoftware issues– We ran into a lot of technical issues while trying to set up ED Express and

the various counseling reports. (Regent FAM user)– It would be nice to have step by step instructions on how to do the process

through EdExpress.– Apart from software vendor not being up to date with the new schema for

XML yet, it would be nice if the search functions within COD worked. (PowerFAIDS client)

– We have a home grown system and the implementation is very time consuming and burdensome.

– The unsatisfaction mainly pertains to SunGard, the Banner software company. They didn't seem to have "done their homework" before rolling out their system upgrades for the 10-11 school year.

– The Department of education needs to understand that all schools do not have a canned system. They need to have a team to evaluate the needs of non-traditional solutions. (Home Grown user)



Ideas For Improvement

PLUS Loans– Federal Direct PLUS Loans have been a sore spot with a slow rollout of the

studentloans.gov PLUS Loan function. – Improve Plus application to include loan period, request for endorser with

application, and of who receives the refund.

“Point of Contact issues– When assigned a COD "point of contact", we'd like to be represented; he's

difficult to contact and provides few answers to our questions.– I haven't yet been contacted by a rep. I'm unsure whether to contact ED,

COD or regional office for guidance.– My on-boarding person was not very responsive to my phone call messages

Reconciliation process– Assistance for schools with the reconciliation process and software that

helps identify differences between COD and the school.



Ideas For Improvement

Understanding of student experience– “It would be helpful it DOE had tutorials we could watch that would show us

what students see when the log into studentloans.gov. and go through the steps of completing the entrance and MPN.”

Testing issues– “DOE should make sure there are enough employees available to test

send/receive files. We continue to wait on the progression of files sent to DOE while DOE employees are in training per our coordinator with Direct Lending.”

– “Being able to take a test record "completely" through the entire process. Currently, we're able to test up to a certain point, but not completely through a simulation of disbursement.”

– “Very poor follow-up from COD regarding test files sent. Due to time limitations, and their lack of call backs and follow-up, we were unable to test with test data but instead must test with live data.”



Need for Technical Resources 35% of schools have requested technical resources from their “point of contact.”– 60% had their request granted, while 30% are still awaiting an answer– Most requests were technical questions and not staffing related

A sampling of school requests for technical assistance include:– G5 set-up process– Testing– Encryption software– Information on non-functional PLUS applications– Banner training consultant– Retrieving credit approval report for PLUS Loans– Consultation with other like schools with home-grown information systems– Assistance with effective way to implement EDConnect via a server – Consultants



Need for Technical Resources Several requests for additional staffing resources were either awaiting a response or turned down:– “3rd party transition service assistance”– “Specific assistance for implementation”– “We have requested a temporary staff member to assist over the summer.

Our rep from DL is not very responsive and seems rather annoyed when we ask questions.”

– Turned down request for: “Operational funding, dedicated systems set-up representative”



Turnaround Times For Resource Requests

20%

10%7%

12%

8%

15%

28%

0%

10%

20%

30%

Samebusiness day

Onebusiness day

2-3 businessdays

4-5 businessdays

Between 6and 10

businessdays

More than10 business

days

Have notreceived ananswer yet

Per

cen

tag

e o

f T

ota

l R

esp

on

den

ts

Survey question: How quickly were you able to get a response on whether your request for additional resources would be granted?Source: SLA Flash Survey: Direct Lending Transition Process, May 2010



Steps Taken To Prepare For Direct Lending

16%

48%

54%

61%

61%

63%

82%

89%

94%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

Consultant

Peer Schools

DL Regl. Meetings

FSA Conference

Software Vendor

Built Internal Team

Communications Strategy

ED Website

DL Webinars

Percentage of Respondents

Survey question: CHECK ALL THAT APPLY. My institution (either myself or other staff members) has already taken the following steps to prepare for Direct Lending: Source: SLA Flash Survey: Direct Lending Transition Process, May 2010



Three Most Helpful ResourcesPeers

– “Peers who have already transitioned to DL”

– “Peer School visit to see how the process actually runs within an office.”

– “Other schools sharing their process and experiences has been very helpful.”

– “Utilizing the National Direct Student Loan Coalition's website has been a huge help.”

Dept of Education– “Our Department of Education rep was very helpful in helping us set up our branch campus

to process DL. She also helped us along, proactively calling to make sure we completed all steps (bank account, COD, etc.)

– “Definitely our ED DL liaison.”

– “My Department of Ed contact and other schools that are DL with the same software are tied.”

– “Department of Ed training webinars”

Software vendors– “Attending a Banner webinar on DL, which we paid for”

– “Sessions at Datatel conference”

– “The SCT conference in California in April”

– “PeopleSoft listserv”



Financial Aid Administrator Confidence Levels

8%3%

37%21%

50%

39%

58%

52%

10%15%

2%6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

FAMS Ready ToProcess Direct

Loan

Parents/StudentsUnderstand

Change

Readiness of OtherDepts.

Per

cen

tag

e o

f T

ota

l R

esp

on

den

ts

Not sureNot confidentSomewhat confidentVery confident

Survey question: Describe your level of confidence that the factors described below will be ready by the July 1st deadline:Note: Sample size for this question is 62 due to change in survey design on second day of surveySource: SLA Flash Survey: Direct Lending Transition Process, May 2010



Other ObservationsSuccess requires a team effort:

– “The Business Office's attitude is ... it's all the FAO's work now!”– “We are a little uneasy as to whether the business office will be ready”

Testing was an issue that came up frequently: – “Lack of testing options for 2009-10 summer term”– “The slow response of the department to getting our testing complete within our time

frame; shades of things to come...”

Costly to implement: – “We're being forced to stretch an already overworked IT and Operations staff. We're

working on 2 Pell grants in a year, all of the new disclosures, figuring out funding formulas without ACG/SMART. There's just be a tremendous amount of transition and change over the last two years. We'll get the transition done; however, it's the other priorities that we had to set aside that will suffer. I'm also surprised this survey didn't ask about how much the transition is costing. In real dollars we have spent about $15,000 for mailings and brochures. In administrative costs, for overtime pay, staffing, answering phones, etc., the cost has yet to be determined but will be quite expensive.”



Other ObservationsSome skepticism and frustrations with COD system:

– “Lots of glitches at the Dept; issues with COD search of MPN's, COD site down, changing status code of MPN without telling FAM's so its not supported. I'm not confident COD can handle the volume.”

– “I am having a difficult time, trying to view individual records on the COD website. Problem with the software.”

Significant effort to get students to sign new promissory note:– “Our processes were very easy. It is an effort to get students to complete a prom

note. Others on campus did not initially understand their part in the process.”


Thank You

Thank you again for your participation!

Please contact Tim Ranzetta if you have any additional comments or questions regarding this survey– Send email to [email protected] – Phone: 650-218-8408

Look for more upcoming SLA Flash Surveys in the future – Please provide us with topics that matter to you!

For more information on Student Lending Analytics, proceed to the final six slides


Student Lending AnalyticsBackground

Founded in 2007

Independent Research and Advisory Service with NO lender affiliations

Mission: Find best lenders for students through an analytically rigorous, unbiased and comprehensive process

Services– RFI Management of FFEL and Private Loans– Research

Successes to Date– Managed RFI process at institutions with over one billion dollars in loan volume– Inside Student Lending, our monthly newsletter, reaches over 5,000 financial aid

administrators– Student Lending Analytics Blog has become the go-to source for breaking

developments and analysis on the student lending industry– SLA Flash Surveys have included the insights from over 1,500 financial aid

professionals on a variety of timely topics– Dozens of Schools Linking To Private Loan Options and SLA’s 2009 Private Loan Guide

which provides students and financial aid offices with an objective and focused list of lenders– SLA Student Satisfaction Surveys measures student satisfaction with lenders


Unlocking the Mysteries of Private Student Loans

Student Lending Analytics: Resources Available

SLA Private Student Loan Ratings

2009 SLA Private Loan Series – 2009 SLA Private Loan Guide

Paying For College Blog

Student Satisfaction Surveys

Coming Soon: Private Loan Quiz



Private Student Loan RatingsAvailable at http://www.studentlendinganalytics.com/ratings.html

Featured on front page of New York Times Business

Focused on evaluating eight lenders that appeared most frequently on over 700 school lender lists that SLA researched

Includes the following factors in ratings:– Expected loan cost– Borrower benefit savings– Fee structure – Flexibility of repayment options– Customer service – Financial stability

SLA receives no compensation from any lenders on this list

New Service: Private Loan Insights to capture real-time information about interest rates and approvals



2009 SLA Private Loan SeriesMost popular post: Shopping for Private Student Loans Makes a Difference!

– Results from 6 student loan applications yields interest rates between 7% - 12%

Before You Apply for a Private Student Loan– Provides checklist of items to complete prior to considering a private student loan

What About Credit Unions?– Explores the increasing role that credit unions are providing in the private student loan market

"Miss A Payment On Your Private Student Loan, You Could See Your Interest Rate Rise"– Highlights two lenders that have clauses in promissory notes which could result in 2% increases in interest

rates triggered by one late payment

Borrower Benefits on Private Student Loans– Provides examples of savings opportunities available to private loan borrowers

What Ingredients Go Into the "Secret Sauce"?– Insights into the factors that lenders consider in making their credit decisions

Does It Make Sense To Shop Around For Private Student Loans?– Provides details on new Fair-Isaac policy about the impact of applying for multiple student loans on your

credit score (hint: it helps student borrowers)

The Promissory Note– Highlights the key terms to be aware of when evaluating lender promissory notes

What is the Meaning of "Instant Credit Response"?– Reviews the on-line application process and analyzes the speed of lender credit reviews

Private Loan Fee Structure– Benchmarks most common fees assessed by private lenders for both origination and servicing of loans


The Student Lending Analytics ProcessRFI Management


Student Lending AnalyticsResearch Services

Inform financial aid offices on industry developments (implications for their lender lists and relationships)

– Student Lending Analytics Blog• Key resource for thousands of professionals in the student lending industry• Timely insights to developments in student lending industry

– Alerts• Legislation, lender exits, earnings calls, industry insight

– Monthly newsletters– Webinars

• December 2008 – A Conversation about FFELP and Direct Lending• May 2009 – Unlocking the Mysteries of Private Student Loans

– Surveys (summaries available on our website)• FFEL vs. Direct Lending• RFI Practices• Implementing Increased Federal Stafford loan limits• Availability of Alternative Loans

– Legislative and regulatory updates– White papers– Help Line to answer questions/resolve issues throughout the year

slide 1© student lending analytics, llc student lending analytics direct lending transition process...

Documents

process survey goals

direct loans student

llc flash survey

survey responses

survey participants

time slide

direct loan program

student borrowers