Federal Loan
Servicing
Brenda Cox, UHEAA/Cornerstone
Wanda Hall, Edfinancial
Matt Stover, Nelnet
Federal Loan Servicers
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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
Page 2
Key Events
• March 31st letter from the Department of
Education to Senator Harkin
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Establish Common Performance Metrics
Incentive Based Pricing
Provide Not For Profit Servicers Additional Volume
Move Towards Comparable Portfolios Across Servicers
Page 3
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
Page 4
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
Page 5
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
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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
Page 7
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
Page 8
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
Page 9
Trends
• Majority of outstanding loans/borrowers are
currently in repayment
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Grace 5%
Repayment 58%
Deferment 14%
Forbearance 13%
Loan dollars in default 10%
 In loan dollars
Page 10
Trends
• 13% of borrowers enrolled in IDR
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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
Page 11
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
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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%
Page 12
Standardization Efforts
• Interest capitalization
• Due diligence
• SCRA
• Credit reporting
• Payment application
• Reaffirmation letter
• Proof on income documentation
Page 13
Customization
• ONE-SIZE DOESN’T FIT ALL
• Portfolio analysis
• Technology available
• Borrower demographics
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Age of portfolio
Age of borrowers
Where reside
Type of school attended
Length of attendance
Page 14
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
Page 15
Customization To
Better Serve borrowers
• Nelnet
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Borrower communication channels
Enhanced communication
Document submission capabilities
Web/Mobile interfaces
Page 16
Customization To
Better Serve Borrowers
• UHEAA/Cornerstone
• Borrower Centric
• Targeted Communications
• Innovation & Resource Usage
• Quality Control
• Training & Professional Development
Page 17
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
Page 18
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
Page 19
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.
Page 20
Total and Permanent
Disability Discharge
(TPD) Update
• Since July 1, 2013 (effective date of new
regulations)
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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
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Thank you!
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