Loan Servicing Overview

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DEPARTMENT OF EDUCATION LOAN SERVICES

July 17, 2012

Anthony Lombardi

WFAA Summer Workshop

1 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services

Sallie Mae Does Everything To Help Students Succeed and Effectively Pay Back and Manage Their Loans

Department of Education Loan Services Today’s Agenda ►

Contacting Us & Resources for Schools

Resources for Borrowers

Loan Servicing Overview

Default Prevention

Current Hot Topics

Questions & Next Steps

3 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services

Contacting Us and Resources for Schools

Department of Education Loan Services Contacting Us

Sallie Mae keeps schools informed through: E-mail, CollegeServ call center representatives, Our “Servicing” Website, Sales and ED Contract Management Meetings, Training Webinars, OpenNet, and as part of our participation at over 40 financial aid conferences each year.

CollegeServ

► Answers questions, provides assistance & reports ► Answers cohort agency status questions ► Provides training and support for OpenNet CollegeServ 1-888-272-4665 5 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services Contacting Us

Sallie Mae-Dept of ED Loan Services NSLDS Servicer Code: 700578 Student and Parent Phone ED

: 800-722-1300

Student and Parent Line Commercial

: 888-2SALLIE (888-272-5543)

Hours

: M-TH 8:00am – 9:00pm F 8:00AM – 8:00PM (EST)

Web

: www.salliemae.com

CollegeServ

: Dedicated group of representatives specifically trained to support Sallie Mae's school customers for all ED and non-ED related inquiries

School Phone

: 888-2SCHOOL (888-272-4665)

Hours:

M-F 8:00am – 8:00pm (Eastern Time)

Web

: www.opennet.salliemae.com

and www.salliemae.com/EDServicing

E-mail:

[email protected]

6 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services Resources for Schools - OpenNet

OpenNet inquiries – school portal for borrower and loan

► See our OpenNet training page as it has a mix of videos and documents covering topics like Adding/Updating a school user, the servicing guide, Granting access to users (under servicing), Contact Information, and the FAQ.

We also have user guides and info on DDI Reports.

► ED-only: https://www1.salliemae.com/content/doe/docs.html

7 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services

Resources for Borrowers

Customer Communication: Early Outreach  We provide helpful, relevant and easy to understand Information on how to:  Manage their loan account on-line, via the IVR or by a Service Representative  Take advantage of Electronic Servicing (monthly billing, auto debit, e-mail) options that can save money (ACH benefit on all ED-owned loans)    Change to one of many repayment options that best suit their situation Receive payment relief Maintain the benefits of good credit      Our Interactive Web Portal “ SallieMae.com/BeDebtSavvy ” helps students: Budget for college and repayment Understand what credit scores and FICO are Become more aware of issues with credit card debt Understand the flexibility and benefits of the many loan repayment options 9 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

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10 Customer Communication: Quarterly Interest Statement  Sent to customers until their accounts enter Repayment  Includes interest information, loan balance, and anticipated repayment begin date  Includes remit slip for customer convenience in case they choose to pay interest early to avoid capitalization  Includes information on benefit of paying interest: 10

Customer Communication: Exiting School Email  Key messages – Automatic debit – Update address and phone – How to make payments 11 11

12 Customer Communication: Early Repayment Sample  Key messages – Where to get answers – Planning for successful repayment – Online account access – How much do I owe 12

Customer Communication: Monthly Billing Statement Provides relevant messages to help borrowers at critical times in the loan life-cycle to better manage their account Links to online account features Provides critical account details Provides slip to return with payment 13 13

Customer Relationships: On-Line Tools  Login easily accessible L OG ON VIA WWW .

SALLIEMAE .

COM 14 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

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Account Summary & Transaction Overview 

Account Summary provides:

– Loan Balance – – Interest (capitalized and accrued) Total amount owed – Past due amount – – Late fee(s) N/A for ED Payment Amount – Due Date – – Loan Advisor/Messages Navigation to view correspondence, last three payments, on-demand printing, and any borrower benefits – Other Transactions 15 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

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Department of Education Loan Services

Loan Servicing Overview

Department of Education Loan Services Loan Servicing Loan Booking In School In Grace Repayment Delinquency and Default 17 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services Loan Booking  Assignment

When and how is the servicer assigned?

► FSA designates the servicer upon the booking of the loan. Booking occurs when COD accepts an origination record, links to the prom note and accepts actual disbursement. ► New borrowers are assigned to Sallie Mae, Great Lakes, FedLoan, or Nelnet based upon percentages assigned by FSA.

► Borrower Mailed a Welcome Letter within 24 hours of Loan Conversion to our System 18 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services Loan Booking  Borrower Notices

How do I know which servicer is servicing my loans?

► When a Direct Loan is assigned to a federal loan servicer, the servicer corresponds with the borrower. ► The welcome correspondence notifies the borrower of the servicer, toll-free phone number, and website information. ► Borrower may visit NSLDS.ed.gov

federal loan servicer(s). to identify their ► Forgot the PIN? Visit PIN.ed.gov

19 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services In School  Interest Payments

How do I make interest payments on my unsubsidized loans while I’m in school?

► Stafford borrowers can securely access their account and make a payment on www.SallieMae.com

at any time. ► Sallie Mae sends quarterly interest statements* while in school or grace. *

email is the only option for these notices.

Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

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Department of Education Loan Services Grace Period  Deferred Repayment (PLUS)

When must I begin repayment on my loan? Do I get a grace period?

► Stafford Loans: 6-month grace period begins the day after they graduate, leave school, or drop below half-time status. Payments are due after the grace period ends. ► Grad PLUS: Borrowers can postpone payments while enrolled at least half time. May also postpone payments for the 6 months after they graduate, leave school or drop below half time (for loans first disbursed on or after July 1, 2008). ► Parent PLUS: Can request to postpone payments while the student for whom they obtained the PLUS Loan is enrolled at least half time. May also request to postpone payments for the 6 months after the student is no longer enrolled at least half time (for loans disbursed on or after July 1, 2008). Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

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Department of Education Loan Services Grace Period  Entering Repayment

What are the most important things a student should know as he/she prepares for loan repayment?

Important messages for borrowers as they are leaving school and entering repayment: ► ► ► ► ► ► Check NSLDS to identify all federal loans Provide servicers with updated contact information Sign up for online account access Sign up for automatic debit to ensure timely payments and receive a 0.25% interest rate reduction Call the servicer or visit servicer’s website to obtain information on repayment options that best meet the borrower’s financial situation. Sallie Mae offers robust payment plan modeling tools and easy on line sign-up for repayment plan options.

Understand that servicers are there to help! 22 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services Repayment  Deferment

Can I provide my servicer one deferment form for my ED held FFEL and DL loans?

As a general rule, the FFEL or Direct Loan Program deferment form is acceptable for all deferment requests for federally-owned loans.

In some cases, a FFEL form must be used for FFEL program loans and a DL form for Direct Loans.

23 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services Repayment  Billing

Payment Fees? Late Fees?

No fees on payment methods

No late fees

No fees on any other activities associated with the servicing of federally-owned loans

24 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Department of Education Loan Services

Default Prevention

Graduation Lessens the Chance of Default

Default Rates

18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 3,7% 16,8% Borrowers who graduated Borrowers who dropped out Source: Education Sector, Degreeless in Debt Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

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Customer Resolution Services Focus on The Customer Experience ► Our Collections Staff encourages and supports staff with coaching and development based on the following key components: – – – Delinquency Resolution Counseling Customer Experience – Compliance ► Quality directly impacts our staff providing a vested interest to consistently provide our customers with world class service.

► Management completes a minimum of 4 random monitors per month for each agent.

► Collection’s senior management conducts frequent group listening sessions each month to ensure consistency and gain a clear understanding of the impacts to our customer base.

27 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Customer Resolution Services Technology Used in the Our Business ► ► ► ► ► Sallie Mae Servicing Systems – CARES – Graphical user interface presents account information to agents in an easy to use format – CLASS Servicing System - All account activity is documented in this Sallie Mae system of record • System logic ensures all due diligence activity is completed as required Auto-Dialer – Blended auto-dialer environment with capability for high volume calls Collection Strategy – Strategy team provides ongoing analysis and modeling for all stages of delinquency – Strata decision engine used to assign delinquent accounts to strategic dialing campaigns – Targeted letter, email, and text message campaigns Vendor Activities – The skip tracing division’s process is enhanced with the use of CLASS automation that enables import transactions with commercial vendor batch data Quality Monitoring – NICE – Call monitoring system used to record calls for training and quality feedback purposes 28 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Customer Resolution Services Contacting the Borrower ► Sallie Mae’s collection practices are designed to maintain and exceed, at all times, the student loan collection standards set forth by the U.S. Department of Education.

► Upon reaching the 15 th day of delinquency, intensive default prevention campaigns are executed by Customer Resolution Services.

► Collection activities are performed at the borrower level. For borrowers who have a combination of loan types or guarantee agencies, collection activities are no less rigorous than the most stringent guarantee agency’s requirements.

29 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Customer Resolution Services Collections Due Diligence and Calling Strategy (Collection Strategies and Activities are Subject to Change)

ED Owned

Default @ 360 Tel = 2-3 days UPS Letter @ 330 Testing @ ~ 330 Dedicated Collector assigned 30 Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

Hot Topics

Department of Education Loan Services

Hot Topics ►

Income Based Repayment Options

Serial Transfers

Special Direct Consolidation Loan Opportunity

Interest Capitalization

Forbearance – 36 month continuous cap

Cohort Default Rates

CDR Appeals

Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

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Questions?

Customer Resolution Services

Contacts

CollegeServ 1-888-272-4665

Anthony Lombardi 206-200-8815 [email protected]

Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

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