Direct Loan Program Overview

Transcription

1 Direct Loan Program Overview Presented by: Anafe Robinson Director of Financial Aid, Scholarships & Veterans Pierce College Agenda What is the Direct Loan Program? What is the student s role? What is the school s role? What is the FSA s role? How does the Direct Loan process work? Resources for borrowers Resources for schools 1

2 What is the Direct Loan Program? The Department of Education is the lender Provides funds for Stafford and PLUS loans Provides Consolidation loans Provides borrower services to include empn online Entrance/Exit Counseling, and repayment options What is the Student s Role? Complete FAFSA and meet eligibility requirements Complete loan entrance/exit counseling Notify school or DL Servicer timely for changes in enrollment, demographic information changes, repayment options, etc Repay loan(s) 2

3 What is the School s Role? Document Student Eligibility Encourage student loan awareness: entrance and exit counseling Award student loans Manage Master Promissory Note (MPN) process Transmit loan origination, disbursement and adjustment data to COD Draw down Direct Loan funds via G5 Disburse loan funds to students What is the School s Role? Update NSLDS enrollment status Reconcile with ED monthly and complete annual closeout Determine staffing roles and responsibilities FA s role vs Business Office s role Use of third-party servicer? Determine MPN processing options Determine software options 3

4 Loan Counseling Online Entrance StudentLoans.gov Exit NSLDS.gov In Person Group Combination of the above Entrance Counseling Requirements Explain Master Promissory Note Emphasize the seriousness of borrowing and repayment obligations Consequences of default Emphasize the obligation to repay the loan in full Sample monthly repayment amounts Explain the effect of accepting the loan on the eligibility for other forms of financial assistance Information on how interest accrues and capitalization 4

5 Entrance Counseling cont d Information on the option to pay the interest of the unsubsidized loan while in school Definition of half-time enrollment and consequences if not maintaining half-time enrollment Importance of contacting school if withdrawing from school How to access NSLDS and its benefits Provide the borrower with school s contact information for questions Exit Counseling Requirements Average anticipated monthly repayment amount Repayment options available Option to prepay each loan Effects of loan consolidation Debt-management strategies designed to facilitate repayment How to contact the Direct Loan Servicer Explain Master Promissory Note Seriousness of borrowing and repayment obligation 5

6 Exit Counseling cont d Consequences of default Terms and conditions of the loan Student Loan Ombudsman Office of the USDE Access NSLDS to track student loan balances and status of loans Tax benefits available to borrowers Provide current demographic information: name, address, SSN, references, driver s license, expected permanent address, expected employer What is FSA s Role? Track school eligibility Provide funding (G5) COD processing Tools and reports Reconciliation and Closeout assistance Training and customer service for schools Loan servicing/customer service for borrowers 6

7 What are the loans under the Direct Loan Program Stafford Subsidized Stafford Unsubsidized PLUS Grad PLUS Consolidation What are the Limits?* Effective July 1, 2008 Year Dependent Undergraduate Independent Undergraduate 1 st Year $5,500 (maximum 3,500 subsidized) $9,500 (maximum 3,500 subsidized) 2 nd Year $6,500 (maximum $4,500 subsidized) $10,500 (maximum $4,500 subsidized) 3 rd Year and beyond $7,500 (maximum $5,500 subsidized) $12,500 (maximum $5,500 subsidized) *based on HR 5715 signed into law May 7,

8 What are the Interest Rates? First Disbursement of a DL Subsidized loan for Undergraduate borrowers: Made on or after And Made before Interest rate on the unpaid balance July 1, 2011 July 1, % July 1, 2012?? 6.8 % What are the Interest Rates? Direct Subsidized Loans for Grad students: 6.8% fixed interest rate Direct Unsubsidized Stafford Loans: 6.8% fixed interest rate Direct PLUS and Grad PLUS: 7.9% fixed interest rate 8

9 What Fees are Charged to Borrowers? Origination fee for Subsidized and Unsubsidized loans first disbursed on/after 7/1/2011 and before 7/1/2012: 1.0% A 0.5% up front rebate also applies to be covered under borrower benefits make 12 consecutive payments No rebate How Does the Direct Loan Process Work? 9

10 Direct Loan Processing Cycle Originate Program Year Close-Out Promissory Note Reconcile Disburse 19 Originate Loan School confirms eligibility, determines loan award and creates student record School Originates a Direct Loan when it sends Direct Loan Award and Disbursement data to the COD system School uses batch record process or COD Web site to create records COD processes/edits and returns response School corrects errors and resends to COD School makes adjustments and sends to COD as needed 20 10

11 PLUS Loan Origination Includes credit check GRAD PLUS borrower must complete FAFSA PLUS MPN includes authorization for credit check by COD Preliminary Credit check can be initiated by school at COD website, with signed authorization Establish school policies for handling credit denials Availability of additional unsubsidized for dependent student with parent denial Early determination of parents unable to meet criteria Bypass credit check and document reason for parent inability to meet criteria Direct Loan Processing Cycle Originate Program Year Close-Out Promissory Note Reconcile Disburse 22 11

12 Master Promissory Note Paper MPN vs. empn Borrower cannot be required to use empn Several options for printing paper notes Multi-year vs. Single year Use Multi-year feature for some or all students Borrower may decline multi-year feature Electronic MPN

13 Master Promissory Note School print vs COD print options: COD prints MPN and sends to school or to borrower School sends blank MPN to borrower School sends MPN with preprinted data to borrower School prints MPN to ED specifications and provides to borrower Master Promissory Note School prints MPN Follow review guidelines Ship to MPN processor Effective 12/19/2011 overnight & express delivery Department of Education 100 Capitol Commerce Blvd Montgomery, AL Rejected MPN s returned for correction 13

14 Direct Loan Processing Cycle Originate Program Year Close-Out Promissory Note Reconcile Disburse 27 Funding and Disbursements Schools use G5 System to View current funding information Request payments and adjust draw downs Return cash Initial Funding School receives initial Current Funding Level (CFL) in G5 Only for Advanced Fund schools Feb/March historically early disbursement June others Reimbursement schools do not receive initial CFL 14

15 Funding and Disbursements Funding Increases Scheduled ED initials CFL Automatic Reporting actual disbursements to COD Manual Contacting COD School Relations Center Requesting Funds G5 Cash Management rules/timing of disbursement Direct Loan funds are award year specific Direct Loan funds are not student specific Direct Loan funds are requested or returned in whole dollars Funding and Disbursements Booked Loan: Accepted Origination record Accepted signed MPN Accepted Actual Disbursement Is now a binding obligation between borrower and ED 30-Day Warning Report ID s unbooked loans for school 15

16 Funding and Disbursements Same disbursement requirements as other Title IV aid Credit student s account Pay credit balances within time frames May pay student/parent cash, check or EFT Stored value and debit cards are a form of EFT Funding and Disbursements Returning Direct Loan funds Excess cash (unable to disburse within 3 business days Return overpayment of DL funds Borrower wishes to cancel all or a portion of disbursement Return using G5 or by check Remember to update COD record 16

17 Direct Loan Processing Cycle Originate Program Year Close-Out Promissory Note Reconcile Disburse 33 Reconcile Monthly basis School reconciles internally, Financial Aid and Business offices School reconciles externally with COD Aids to Reconciliation: School Account Statement (From COD) Direct Loan Tools Software (FSA Download site) COD screens and reports COD Reconciliation specialists 17

18 Choose program and year Summary financial info Select program and year 18

19 Direct Loan Processing Cycle Originate Program Year Close-Out Promissory Note Reconcile Disburse 37 Program Year Close-out Process is complete when: School and COD show a cash balance of $0 and All COD records match all school DL record and business office system transactions, and School Account Statement reflects a $0 unbooked balance. COD and FSA assist with reports and screens: School Account Statement Cash Activity Ending Cash Balance 19

20 SAS Cash Summary Do the totals match school records? SAS Disbursement Detail Match School Records? Missing Data? Any Unbooked? 20

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22 Resources for Borrowers Resources for Borrowers Direct Loan Servicing Center (800)

23 What Resources are Available for Assistance and Training? Resources for Schools COD School Relations Center Direct Loan Program (800) Website: Direct Loan Servicing Center School Support Services (888)

24 Training Resources COD Computer Based Training Includes DL Reports session empn simulation session EDExpress Web-based training Self-paced training for users of EDExpress and EDconnect Both available at IFAP 24

25 Questions? 25