Education
Department
Dwight Vigna
Director, Default Division
1
FSA Default Division
Goals
• Goal
1: Be respectful to our borrowers and find the
best solution that will resolve the borrower’s debt
regardless of the commission being paid
• Goal 2: Increase the FSA overall collection rate on a
year to year basis even though the inventory is also
increasing annually
2
Default Recoveries
- In Billions
Combined
FY14 - $20.4
FY13 - $18.2
FY12 - $13.1
FY11 - $12.0
FY10 - $10.2
FY09 - $ 8.8
FY08 - $ 8.9
FY07 - $ 6.9
3
ED
$10.63
$ 8.51
$ 3.68
$ 3.40
$ 3.04
$ 3.07
$ 3.21
$ 2.67
FY14 Top Ten By
Recovery Rate
Rank
1
2
3
4
5
6
7
8
9
10
Agency
ARKANSAS
RHODE ISLAND
LOUISIANA
OKLAHOMA
MAINE
ASA (MASS)
USAF
NSLP (NEB)
MISSOURI
KENTUCKY
Collections
80,087,206
45,043,494
68,486,357
139,862,143
17,395,905
1,005,222,247
1,807,459,205
335,207,453
103,599,498
143,403,552
Adjusted Beginning
Inventory
Percent
179,678,104 44.57%
119,499,832 37.69%
185,040,695 37.01%
396,963,955 35.23%
50,886,106 34.19%
3,048,566,099 32.97%
5,647,187,947 32.01%
1,062,303,285 31.55%
332,591,977 31.15%
476,409,977 30.10%
4
FY14 Top Ten by
Recovery Rate w/o
Consols
Rank
1
2
3
4
5
6
7
8
9
10
Agency
ARKANSAS
LOUISIANA
OKLAHOMA
RHODE ISLAND
MAINE
USAF
NELA (WA)
NEW HAMPSHIRE
KENTUCKY
COLORADO
Beginning Inventory
Collections
65,972,070
179,678,104
61,227,965
185,040,695
120,264,645
396,963,955
34,592,910
119,499,832
14,547,397
50,886,106
1,551,806,444
5,647,187,947
76,462,116
293,788,278
14,639,002
58,581,342
115,032,056
476,409,977
215,090,003
946,197,043
Percent
36.72%
33.09%
30.30%
28.95%
28.59%
27.48%
26.03%
24.99%
24.15%
22.73%
5
FY13 Recovery Rate By
Portfolio
Combined Program Recovery Rate
P&I
Recoveries
Recovery
Rate
GA
$34,502,742,432
$9,721,114,778
28.17%
ED
$55,886,286,405
$10,629,996,256
19.02%
Combined
$90,389,028,837
$20,351,111,034
22.52%
6
Regular
Regular
FY14
FY13
FY12
GA
$659,831,565
$759,645,000
$754,654,568
ED
$611,186,860
$562,750,765
$539,983,209
Combined
$1,271,018,425 $1,322,395,765 $1,294,637,777
7
TOP
TOP
FY14
GA
$800,957,923
FY13
FY12
$848,556,209
$990,651,634
ED
$1,300,561,456 $1,331,685,591
$555,242,177
Combined
$2,131,519,379 $2,180,241,800 $1,545,893,811
8
Rehabilitations
Rehabilitations
FY14
FY13
FY12
GA
$5,232,338,236
$4,736,266,045 $4,400,196,618
ED
$7,383,519,787
$5,758,179,306 $1,761,800,453
Combined
$12,615,858,023 $10,494,445,351 $6,161,997,071
9
AWG
AWG
FY14
FY13
FY12
GA
$665,888,004
$655,890,260
$668,323,580
ED
$558,532,023
$291,422,130
$345,010,734
Combined
$1,224,420,026
$947,312,390 $1,013,334,314
10
Direct
Consolidations
Regular
FY14
GA
ED
Combined
FY13
FY12
$2,362,099,050 $2,711,129,883 $2,584,213,293
$746,196,131
$567,475,161
$474,247,061
$3,108,295,181 $3,278,605,045 $3,058,460,354
11
FY14 GA
Consolidations
Consolidations
$2,362,099,050
Total Collections
$9,721,114,778
% of Total
24.30%
Highest percentage was 34.84%
Lowest percentage was 10.60%
12
FY14 Top Ten
Consolidators
Rank
1
2
3
4
5
6
7
8
9
10
Agency
VERMONT
MISSOURI
PENNSYLVANIA
NSLP (NEB)
NORTH CAROLINA
SOUTH CAROLINA
NORTH DAKOTA
MASS (ASA)
ECMC (VA)
TENNESSEE
13
Consolidation
Collections
8,377,493
35,392,859
330,067,127
112,837,907
14,046,710
22,929,424
2,457,924
330,104,832
500,842,026
33,293,776
Total Collections
24,048,014
103,599,498
976,591,712
335,207,453
41,785,790
68,425,667
7,448,445
1,005,222,247
1,825,526,288
121,651,842
Percent
34.84%
34.16%
33.80%
33.66%
33.62%
33.51%
33.00%
32.84%
27.44%
27.37%
Collection Performance
CPCS #13-19 Avg. - Unrestricted
14
Collection Performance
Quarterly CPCS #13-19Avg. – Small Business
15
Portfolio
Characteristics
September 2013
• Size: $55,886,286,405
0.30%
0.82%
0.07%
37.81%
60.99%
16
Inventory
Direct
FFEL
FISL
Perkins
Other
Portfolio
Characteristics
September 2014
• Size: $65,961,695,813
0.25%
0.67% 0.06%
Inventory
Direct
37.73%
FFEL
61.29%
FISL
Perkins
Other
17
Collections 3-Year
Forecast
2014
2015
2016
2017
Inventory
$55.B
$65.B
$76.5B
$88.5B
Collections
$10.6B
$12.5B
$13.9B
$15B
18
Treasury Offset Program
PY2014
P&I Certified
GA
$23,673,661,746
ED
$29,951,216,165
Total
$53,624,877,911
• ED Collections -
$1,331,685,591
• GA Collections -
$ 848,556,209
• Total -
$2,180,241,800
19
Treasury Offset Program
• Certification processing is on schedule
• Cindy sent the Action Code e-mail
• GA Certification files are due 11/3 -11/7
• Inactivation file will be processed on 11/12/2014
• Certification files are sent to Treasury on 12/8/2014
20
Consolidations
• Used be one Consolidation Servicer
• Now we have multiple and we have to keep the
consolidation even across them
• New forms were created but not really relate to the
change
• The new process use a web application
• We created a new contract to support the web
application
21
Consolidations
• The Default process as well as the GA process uses
a schedule for who to send your consolidations to
• Issue in the beginning that we believe are now fixed
22
Rehab Processing
• Started the IBR R&A process in July 2012
• Basic rules were get the information over the
phone to complete the IBR calculator and
document the values on the borrower’s account
• In March 2013 we create some new rules
• Require either Tax information or an ADOI form to
validate information from the phone
23
Rehab Processing
• July 1, 2014 implemented the new regulations
• Require documentation and supporting
documentation for ADOI form
• Require a rehab agreement from all borrowers
• PCA are not supposed to set up a rehab until all
documentation is received and imaged into the
borrower’s account
24
Rehab Processing
• Numbers from FY 2014
• 338,370 borrowers through regular rehab process
• 5932 Borrowers through BSR process
• 671 Borrowers through both
• 343,631 Unique borrowers rehabbed (an average of
28.6k per month)
• Our average prior to the FY 2012 change was under
10,000 borrowers per month
25
Rehab Processing
Numbers*
• 91% of borrowers are using the 15% rule leaving 9%
using the Financial Information Statement (FIS)
• 6% of the rehab borrowers are in or were recently
in an AWG
• The average rehab payment amount is $48.13
* - Based on sampling of 3,559 borrowers
26
Department Purchasing GA
Rehabs - Requirements
• Notice of Intent Form Submission
• Plan to use the deal IDs and the EA27/EA80 for file
transfer processing
• The GA will also send a Bill of Fees
• File must be transferred to Servicer 4 business days
prior to date of transfer
• The Servicer will do standard loan edits
• The Servicer creates a Loan Detail Schedule and
reconcile to the GA Bill of Fees
27
Department Purchasing GA
Rehabs - Requirements
• The Servicer will send the Loan Detail Schedule to
the GA and FSA CFO
• GA will send necessary collateral one business day
prior to the transfer date
• The Servicer will perform collateral review
• The Servicer will report to NSLDS
28
IRS Skip Tracing
• We have a signed CMA
• We have to make system changes in order to use
the CMA
• Currently scheduled for February 2016
• There will be audits from the IRS on this process
• New Training must be done for all staff that
includes IRS FTI (Federal Tax Information)
requirements
29
IRS Skip Tracing
• Neither ED nor its Contractors (PCA or GA) may redisclose the IRS Address unless legal parameters in
the Internal Revenue Code (IRC) (section 6103) are
followed, which are in addition to those required by
the Privacy Act!
30
NDNH Match
• A working draft document is now being reviewed
• We believe the IRS process will also be a part of this
match
• This is also scheduled for February 2016
31
DMCS O&M Contract
• Transition date was 8/1/2014
• First monthly release was a complete success
• There are 8 Quarter releases that start with
11/2014 and go through 8/2016
• There are monthly release that will fix outstanding
issues
32
DMCS O&M Contract
• Release Themes and Dates:
•
•
•
•
•
•
•
•
11/14 – Rehab and Suspense
2/15 – Loan Exchange, Transaction Processing
5/15 – PCA, Refunds
8/15 – TOP, Bankruptcy, Finance
11/15 – AWG, NSLDS
2/16 – Images, Interfaces, Compromise
5/16 – Notices, Consolidation, DOJ
8/16 – Cleanups, PCA Invoicing, Web
33
DMCS O&M Contract
• How does this affect the GAs?
• No changes today
• There will be a transition of the data center at some
future point
34
PCA Contracts
• Eleven Small Business Awards were made in
October
• Three were incumbents
• Current time frame for their first release of
borrower is August 2015
• Unrestricted Procurement is still on-going
35
Questions?
36
Department of Education
Regulatory Update
NCHER Knowledge Symposium
Nathan Arnold
U.S. Department of Education
November 3, 2014
Gainful Employment
 Issue renegotiated following District Court
ruling in 2012
 Three negotiations:
 Sept. 9 -11, Nov. 18 -20, Dec. 13, 2013




Consensus not reached
NPRM published on March 25, 2014
Final rule published October 31, 2014
Effective July 1, 2015
Gainful Employment
• Covers all programs at proprietary institutions
and non-degree programs at other institutions
• Debt to earnings metrics: passing is 8% of
annual income, 20% of discretionary income
• Establishes three levels of compliance: passing,
zone, and failing
• Eligibility not affected by program cohort default
rate metric proposed in NPRM
• Program ineligible if it fails 2 of 3 consecutive
years or is in zone 4 consecutive years
• Disclosures on costs, earnings, debt, completion
Violence Against Women Act
 Violence Against Women Act reauthorized
March 7, 2013
 Made changes to Clery Act institutional reporting
requirements
 Three Negotiations:
 Jan. 13 – 14, Feb. 24 – 25, March 31 – April 1,
2014




Consensus reached
NPRM published June 20, 2014
Final rule published October 20, 2014
Effective July 1, 2015
Violence Against Women Act
• Requires institutions to:
– Maintain statistics on dating violence, domestic violence,
sexual assault, and stalking
– Provide, and describe in annual security reports,
prevention and awareness campaigns
– Provide a prompt, fair, and impartial disciplinary
proceeding, and provides for requirements governing that
proceeding
– Provide information and support services to victims
Program Integrity and Improvement
 Four negotiations:
 Feb. 19 - 21, March 26 - 28, April 23 – 25,
May 19 – 20, 2014
 Cash management
 State authorization of distance education programs
 State authorization of foreign locations of domestic
institutions
 Definition of PLUS adverse credit history
 Repeat coursework
 Clock-to-credit hour conversion
 Tentative agreement reached on some issues,
but overall consensus not reached
Program Integrity and Improvement
• Definition of PLUS adverse credit history
• NPRM published on August 8, 2014
• Final rule published October 23, 2014
• Effective July 1, 2015, ED will implement early
– Revised definitions and amounts apply to both Parent
PLUS and Grad PLUS loans
– Revised adverse credit definition
• If the applicant has one or more debts with combined outstanding balance
greater than $2,085 that is: (1) 90 or more days delinquent or (2) Placed
in collection or charged off during previous two years of credit report
– $2,085 can be increased by ED based on CPI if the
change would be ≥ $100
– Borrowers with extenuating circumstances or endorser
must complete counseling
Teacher Preparation
• Teacher Preparation Negotiated Rulemaking
Committee
– Negotiations were held in November 2012
– Consensus not reached
– NPRM currently under review at OMB
– Except for the Teach Grant component, these
proposed regulations are not subject to the
Master Calendar requirements
Pay As You Earn Expansion
– Federal Register Notice published Sept. 3, 2014
– We propose to develop regulations that:
 Allow more student Direct Loan borrowers to qualify
for PAYE
 Target the new PAYE option to borrowers who would
otherwise struggle to repay their student loans
– Interested parties may suggest additional issues for
consideration at two hearings or in writing:
 Washington, D.C. (Oct. 23, 2014)
 Anaheim, California (Nov. 4, 2014)
 Written suggestions must be received by Nov. 4,
2014; see notice on regulations.gov for instructions
Pay As You Earn Expansion
• Planned Negotiated Rulemaking on
Expansion of PAYE Repayment plan
– Negotiating sessions would begin Feb.
2015:
 Three sessions
 Approximately 3 days each
 At roughly monthly intervals
Other Regulatory Activity
• Loans II Package
– Loan rehabilitation, updates/consolidation of FFELP and
Direct Loan regulations, AWG, closed school discharge
– Final rule published November 1, 2013
• 150% Direct Subsidized Loan Limit
– Limits receipt of Direct subsidized loans to 1.5X the length
of borrower’s currently enrolled program
– Loss of eligibility and interest subsidy after reaching limit
– Affects new borrowers on/after July 1, 2013
– Final rule published January 17, 2014
– Exempt from negotiated rulemaking and master calendar
SCRA Dear Colleague Letter
• Improved Administration of the Servicemembers
Civil Relief Act for Direct Loan and FFEL Borrowers
(GEN-14-16), published August 25, 2014
– Result of work with DOJ to simplify process for loan holders
to confirm eligibility for benefits §527 of the SCRA
– FFEL lenders authorized to use DOD’s DMDC database
– Military orders and borrower request no longer required
– Lenders/servicers using DMDC to grant the interest rate
limitation not subject to program liabilities if DMDC is found
to be incorrect
– Independent confirmation of DMDC information (i.e. military
orders) not required, but DMDC information must be retained
in borrower’s file
ED Servicing Summit
• One-day session on servicing is to explore various
topics of interest to student borrowers, consumer
advocates, financial aid administrators, and policy
makers
• Town hall meeting with Undersecretary Mitchell,
break-out discussion sessions
Monday, December 1, 2014
8:30 A.M. – 5:00 P.M. (ET)
Omni Hotel at CNN Center, Atlanta
• Registration:
fsaconferences.ed.gov/servicingsummit.html
CONTACT INFORMATION
Nathan Arnold
Office of Postsecondary Education
202-219-7134
Nathan.Arnold@ed.gov
Pam Moran
Office of Postsecondary Education
202-502-7732
Pamela.Moran@ed.gov
Ombudsman Group
FY 2014 Activities Summary
November 3, 2014
NCHER Knowledge Symposium
Customer Experience
U.S. Department of Education
Highlights of FY 2014
•
Received 300,000th (all-time) customer contact
•
Received total of 38,665 contacts in FY 2014
•
Published blog post in collaboration with
NCHER SL Ombudsman Caucus
•
Awarded contract and began transition to new
call center and case management support
52
NCHER Knowledge Symposium – November 2014
FY 2014 Contact Volumes
•
80% of requests from customers resolved in
first/initial contact
•
Top 5 Overall:
•
•
•
•
•
•
53
FSA Assistance – 7051
Account Balance – 6437
Repayment Plans/Amounts – 4551
Loan Cancellation/Discharge – 3691
Default -- 3462
Credit Reporting issues were the basis for 1953
contacts
NCHER Knowledge Symposium – November 2014
FY 2014 Case Outcomes – Research Cases
•
38.1% of cases received and closed during the
year resulted in “Confirmation”
•
•
32% resulted in “Action”
•
•
Highest proportion: NSLDS (74.9%)
18.4% resulted in “Information”
•
54
Highest proportion: Bankruptcy (59.2%)
Highest proportion: Wage Garnishment (31.9%)
NCHER Knowledge Symposium – November 2014
Other Activities in FY 2014
•
1191 customers reported being referred from
CFPB; 467 referred to CFPB
•
Hosted four conference calls with student loan
borrower interest groups
•
Implemented a new customer survey using
American Customer Satisfaction Institute
(ACSI) methodology (September)
55
NCHER Knowledge Symposium – November 2014
Thank you!
Joyce DeMoss, Ombudsman
Joyce.DeMoss@ed.gov
202-377-3992
Questions?
56
NCHER Knowledge Symposium – November 2014