““RationalRational and Irrational Adventures in the Direct Loan Wonderland”

Presented by

Sherry Proper

Director of Financial Aid & Enrollment Support

Allegheny College

2

“Chapter 1 – Down the Uncertain Chasm”

• Liquidity injected into FFELP by Government purchasing of loans in 2008-09 & 2009-10 – Very unlikely to happen for 2010-11

• July 1, 2010 not that far away• Will FFELP $$$ be available?• Will lenders remain in FFELP?• Is 100% DL participation inevitable?• What has your school done to prepare?

3

“Chapter 1 – Down the Uncertain Chasm”

• Virtually all the same regulations• Use of MPN & entrance counseling• Same annual & aggregate loan limits• Similar borrower benefits & repayment

options• Same interest rates except PLUS

– FFELP PLUS 8.5%– DL PLUS 7.9%

4

“Chapter 2 – The Puddle of Tears”

• It’s a different language in a Parallel World– DRI, booked loans, disb sequence numbers, etc.– Originate instead of certify– Make loans inactive instead of canceling

• Single source (G5) instead of many sources• Required monthly reconciliation

& year-end closeout• Technological changes• Processing & procedure changes

5

“Chapter 3 – The Circle Race”

• Does it feel like we are running in circles?• Preparation prior to converting

– New DL school set up– DL implementation steps– Software issues

• Also prepare for the follow-up work– How to handle PLUS borrower info– Response records, rejects & warnings – Reconciliation

6

“Chapter 4 – Rabbit Sends a Little Help”

• Helpful DL Software Considerations– Send & receive DL/COD data– Determine if you have DL rejects– View details about response errors– View PLUS borrower information– View sequence numbers & COD responses– View entrance interview dates– Determine the Booked Loan amount– Reconciliation reports for DL– COD message classes

7

“Chapter 5 – Advice from the Caterpillars”

• Checklist for the Transition to Direct Loans– Participation & technology readiness– Communication– Awarding loans & revisions– Originating loans– Promissory notes– Entrance counseling– Disbursement process & delayed disbursements– COD reports – Obtaining funds

8

“Chapter 6 – Booked Loans & Pepper”

• Linking MPNs– Loan award – Active MPN– Data elements needed to link loans

• Booked Loans – COD must receive & accept:– Completed/signed MPN– Award record – Actual disbursement (DRI=true)– Key loan data elements

• Person data• Award/disbursement data

9

“Chapter 7 – PLUS MPN Mad Tea Party”

• Institutional PLUS loan form– Advantages– Disadvantages

• New PLUS application website– Advantages– Disadvantages

• School-initiated credit check– Advantages – Disadvantages

10

“Chapter 8 – The Queen’s Croquet Court”

• PLUS approvals like chaotic croquet game• Approved if no adverse credit • Different from the more strict

criteria in FFELP• PJ as an alternative to the credit check

» SSI income» Welfare recipient» Active bankruptcy proceedings» Other ???

11

“Chapter 9 – Mock Turtle’s COD Story”

• COD at the center of DL processing• Common record “data blocks”

» Disbursement» Award» Person» Entity Information» Common Record

• Batch search, summary, detail• MPN search & credit check info• Person information

– Award detail, disbursement history

12

“Chapter 10 – Lobster Counseling Quadrille”

• New online entrance counseling• New online exit counseling• Entrance & exit reports available• Combination FFELP & DL complications

– One exit counseling session okay, but

must provide additional info on other program

13

“Chapter 11 – Who Stole the Tartlets?”

• Reconcile monthly– Where is the money?– Internally FA & Business Office– Externally with COD

• Cash, loan summary, loan detail

• COD screens & reports• SAS from COD• Software system reports• DL Tools software• COD reconciliation specialists

14

“Chapter 12 – Alice’s DL Evidence”

• Evidence indicates things will be okay in the DL Wonderland– Solid servicing system– Successful school examples– Colleagues helping each other

• DL Info exchange– What DL tip/advice can you offer?– What DL help do you need?