2013 Training Module 5: Student Loan Consolidation Program KC Credit Services 2016 Swift Ave., No. Kansas City, MO 64116816-421-8001
Page1 Table of Contents I. Introduction II. Federal Student Loan Consolidation Program A. Who is eligible? Who is not eligible? B. Program Outline 1) Program Fees 2) Processing Requirements III. IV. Student Loan Forgiveness Program Student Loan Process Cycle A. Basic Steps of Student Loan Process B. Rehabilitation Process C. Possible Delays in Consolidation D. Qualifying Questions V. Benefits of a Consolidation VI. KCCS Selling Steps A. Comprehensive Student Loan Consolidation Program Script B. KCCS Selling Script and Steps - Simplified C. Student Loan Quote Form D. Full Application Package Form
Page2 I. Introduction Federally backed Student Loans often carry high interest rates at certain points in the life of the loan. The terms are quite high as well, often being 30 years or more. Payments often become unbearable for graduated students just starting out, as well as later on in life. The student feels they may never get out from under the weight of these loans. If you have a potential client who suffers from this type of loan or loans, we have the answer to handling this problem. Our Student Loan Consolidation Program. The way this program works is simple: obtain a quote from the company for a new loan. Once the client provides some basic information and their FAFSA pin number, the company goes to work pulling all the information they can on each loan that is to be enrolled in the program. They will provide a quote to the consumer, and as soon as the client decides to move forward, they pay an enrollment fee of $599 and send that along with their enrollment package. Under certain circumstances to be discussed later in this text, the customer may be eligible for a lower fee. The company then negotiates the lowest balance possible with the former loan holder, and pays off the loan. The balance(s) are then aggregated into one new loan provided through the federal government, reducing the balance owed, the length of the loan, and the payment amount. The customer can choose one of three different repayment options, and then the loan closes. In some cases, a customer who has been working in the public sector since graduation may be eligible for loan forgiveness after ten years of repayment. So be sure to ask your customer about what type of job they have, to see if they qualify for this program. Attached to this training manual are several pages of documents which you will need to become familiar with to adequately represent this program. Once you have read through these sheets, there is a script with appropriate questions, the initial quote form, and the full enrollment package. This program pays the salesperson $75 regardless of the enrollment fee acquired. It is the responsibility of the salesperson to obtain the quote, go over the quote with the customer, obtain the agreement on which option to choose, cause the customer to complete the enrollment package and obtain a check or credit card number to complete the sale. Once the enrollment has been received by the office, the salesperson s job is complete. On the following pages, you will find more details about the opportunities available in this program, including hardship allowing a lower enrollment fee, and what to do if a person is delinquent on their current accounts. Additionally, there is a section on how a person who has already graduated and been paying on their loans without delinquency may qualify for forgiveness of the debt after 10 years if they are involved in any kind of public service.
Page3 II. Federal Student Loan Consolidation Program A. How Student Loan Consolidation Works? Step 1: The first step in consolidating your student loans is applying for a consolidation with us by submitting a consolidation application. Step 2: We Locate Your Student Loan information and loan amounts. Then give you the approximate payments and terms on the requested new loan. Step 3: Client signs and returns the application back to us. Step 4: Application Processing After the client s application has been submitted for processing, the loan retrieval begins. The consolidating lender will contact the old lenders for the exact amounts owed; this information is sent to them on a loan verification certificate, or LVC. This process can take up to 60-90 days depending on the response time from the old lender(s). Once the payment is sent to your old lender(s), your loans have officially been consolidated. You should receive a new statement from the new consolidation lender detailing the terms of the new loan. Your previous lenders can take a week or two to close out your accounts, so do not be alarmed if you get a statement from both your new and old lender. This is normal. Who is Eligible? Students with one or more of the following loans: Subsidized Loans Subsidized Federal Stafford Loans Direct Subsidized Loans Subsidized Federal Consolidation Loans Direct Subsidized Consolidation Loans Federal Insured Student Loans (FISL) Guaranteed Student Loans (GSL) Unsubsidized Loans: Unsubsidized and Nonsubsidized Federal Stafford Loans Direct Unsubsidized Loans, including Direct Unsubsidized Loans (TEACH) (converted from TEACH Grants) Unsubsidized Federal Consolidation Loans Direct Unsubsidized Consolidation Loans
Page4 Federal PLUS Loans (for parents or for graduate and professional students) Direct PLUS Loans (for parents or for graduate and professional students) Direct PLUS Consolidation Loans Federal Perkins Loans National Direct Student Loans (NDSL) National Defense Student Loans (NDSL) Federal Supplemental Loans for Students (SLS) Parent Loans for Undergraduate Students (PLUS) Auxiliary Loans to Assist Students (ALAS) Health Professions Student Loans (HPSL) Health Education Assistance Loans (HEAL) Nursing Student Loans (NSL) Loans for Disadvantaged Students (LDS) Who is not eligible? Clients who have student loans considered in school status Clients that have accounts that is in garnishment/default status. There is an additional program offered for accounts with this particular status. Clients that have PRIVATE student loans B. Program Outline The Program will attempt to process and complete each consolidation after payment is received. Program fees: The Federal Student Loan Consolidation Program has a onetime cost of $599.00. A Client can qualify for Hardship Status and have the cost reduced to $399.00. There is an additional fee of $300.00 if the client has accounts in Garnishment Status. *Client may divide fee up into 3 payments within a 90 day period- other payment arrangements may be considered but must be authorized by the our Case Manager. Processing Requirements: All Clients must meet all of the Program Guidelines or they will not be accepted. Client must currently not have a current lawsuit or garnishment order. There is an additional program offered for accounts with this particular status. Client must not have ever consolidated these loans before. FFEL is OK. There is a possible additional program offered for accounts that have already been consolidated. Client must have completed and signed a full Program contract.
Page5 III. Student Loan Forgiveness Program What is the Public Service Loan Forgiveness Program? Through the College Cost Reduction and Access Act of 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work fulltime in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. Since borrowers must make 120 monthly payments on their eligible federal student loans beginning after October 1, 2007 before they qualify for the loan forgiveness, the first cancellations of loan balances will not be granted until October 2017. What are the borrower eligibility requirements for loan forgiveness under the Public Service Loan Forgiveness Program? The borrower must not be in default on the loans for which forgiveness is requested. The borrower must be employed full time by a public service organization When making the required 120 monthly loan payments (certain repayment conditions apply) At the time the borrower applies for loan forgiveness; and At the time the remaining balance on the borrower s eligible loans is forgiven. What are the specific loan repayment requirements for loan forgiveness under this program? The borrower must have made 120 separate monthly payments beginning after October 1, 2007 on the student loan Earlier payments do not count toward meeting this requirement. Each of the 120 monthly payments must be made for the full scheduled installment amount within 15 days of the due date The 120 required payments must be made under one or more of the following D.O.E Program repayment plans Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers) Income Contingent Repayment Plan (not available to parent Direct PLUS Loan borrowers)
Page6 What types of public service jobs will qualify a borrower for loan forgiveness under this program? The borrower must be employed full time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position. For purposes of the Public Service Loan Forgiveness Program, the term public service organization means A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges and universities); A public child or family service agency; A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code (includes most not-for-profit private schools, colleges, and universities); A Tribal college or university; or A private organization that is not a for-profit business, a labor union, a partisan political organization, or an organization engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing) and that provides the following public services: Emergency management Military Public safety Law enforcement Public interest law services Early childhood education (including licensed or regulated health care, Head Start, and statefunded pre-kindergarten); Public service for individuals with disabilities and the elderly; Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations); Public education Public library services; and School library or other school-based services.
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Page11 Phase I Qualifying Questions for Warm Transfers 1. Do you currently have Federal Student Loans? (Must be yes) 2. Are you currently still In School status? (Must be no) 3. Are you currently paying on your Federal Student Loans? Extra Questions that typically generate a better quality transfer: 1. Are you current or past due on your Federal Student Loans? 2. Are you currently being garnished (IRS or Wage)? 3. Have you previously consolidated your Federal Student Loans?
Page12 IV. Benefits of a Consolidation Consolidation Loans allow borrowers to combine one or more of their Federal education loans into a new loan that offers several advantages. One Lender and One Monthly Payment With only one lender and one monthly payment due for student loans, it is easier than ever for borrowers to manage their debt. Borrowers have only one lender for all loans included in a Direct Consolidation Loan. Flexible Repayment Options Borrowers can choose from multiple repayment plans with various term selections to repay their consolidation loan(s), including an Income Contingent Repayment and an Income-Based Repayment Plan. These plans are designed to be flexible to meet the different and changing needs of borrowers. With a consolidation loan, borrowers can switch repayment plans at anytime. If you select the IBR Plan and want to change at a later date, your only option will be the Standard Plan. Garnishment and or Rehabilitation Loans Borrowers that have loans that have fallen into a default/garnishment status ARE still eligible for consolidation. In this particular status, clients will have the option to rehabilitate the defaulted student loans. Within the rehabilitation process, any loans that have fallen into the garnishment status, the garnishment will stop after 6-9 affordable monthly payments. Any borrowers that have defaulted accounts and are not currently being garnished, the accounts will still be eligible for rehabilitation with the same terms above. The monthly rehabilitation payment is based on the borrower s financial status. The most beneficial aspect of the rehabilitation process is once the rehabilitation has been completed, 6-9 monthly payments, any negative marks placed on borrower s credit for the defaulted student loans will be removed. At that time, the loans will be eligible for Student Loan Consolidation. No Minimum or Maximum Loan Amounts There is no minimum amount required to qualify for a Direct Consolidation Loan. Reduced Monthly Payments A consolidation loan may ease the strain on a borrower's budget by lowering the borrower's overall monthly payment. The minimum monthly payment on a consolidation loan may be lower than the combined payments charged on a borrower's Federal education loans.
Page13 VI. KCCS Selling Steps - Simplified KCCS Sales Steps/required by us for lead generation: (black printing) (blue printing done by MDMA) Step 1. Explain Program is base terms, to determine eligibility Step 2. Provide minimum information (noted below) and request quote, using this form: File name: Student Loan Quote Form.pdf Step 3. Once quote received and payment method chosen, use the fillable PDF form to complete their application. File Name: MDMA Student Loan Application.pdf Make customer aware of requirements list to prepare for welcome call. Stress to client about taking the call. After 4 attempts, referred back to us for handling. 4. Welcome call goes out from MDMA. They verify basic information, obtain references like Driver s License, proof of employment, go over complete list of paperwork requirements. Forbearance issues explained to client. 5. 1 st payment on enrollment fee received and verified, start work on consolidation. 30-90 days. 6. Once offer from new lender accepted, walk through all paperwork. 7. Explain forgiveness program, if applicable. Program earns salesperson $75 commission, regardless of application fee.
Page14 VI. KCCS Selling Steps (continued) A. Comprehensive Student Loan Script (from provider) revised 2/13/12 (this script is provided by the originator of the new loan. Take what you need from it, but make your shorter, as in the KCCS Steps in next section) Hello. My name is with. It sounds like you are looking for some assistance with your student loans, is that right? Ok, I have a few quick questions to see how we can be a service to you today. QUALIFIYING QUESTIONS: 1. How much in student loans do you have? 2. How many student loans do you have? 3. Are they Federal Student Loans or through a private lender? 4. What is your current monthly payment? 5. Are you current or behind? (if behind) Are you in default or being garnished? 6. Have you ever consolidated your loans before? (If previously consolidated) Have you taken on more student loans since then? Thank you (Customer s name), Based on the answers you ve provided me, it looks like you may be eligible for a Federal Student Loan Consolidation. I m sure you ve heard on the news that student loans are a growing concern to the U.S. economy. There are literally millions of people struggling to pay off their student loans. The good news is that we will be working with a Non Profit company called Military Debt Management Agency (MDMA). I m sure you ve heard of them. MDMA has been providing debt relief to military personnel for over 15 years and have recently been approved by the Department of Education to offer student loan assistance to private citizens as well. So let me ask you a question. If we can provide an option to consolidate your current loans with a much lower monthly payment, would you be interested in getting that help today? Great! MDMA is typically getting interest rates between 2% and 8% and payments are usually half of what you would normally be paying. In addition, if we can prove a financial hardship we may be able to drop your payment even further. Now there is a one-time enrollment fee to get you setup on the program, but usually it s around the same amount as a typical monthly payment. I ll be able to let you know the amount once we receive the quote. The good news is that once your completed application is submitted, the DOE will grant you a 90-day deferment on your current loans while they process your consolidation. In addition, MDMA s underwriting standards make sure 99% of all loans sent through are approved, and even offer a 100% MONEY BACK GUARANTEE if it s not. Are you following me so far? Let me get a few pieces of information from you so we can request a quote on your new consolidation loan. Do you have your statements handy?
Page15 2 options to request a quote: Option #1 information needed: Option #2 loan info is not available *Full Name *Full Name w/ middle initial *Loan type, balance, current %, and *Address, SSN, DOB Monthly payment *Either FASFA pin or MMN & City of Birth The last thing we need to do before I can send the application over is a quick budget. This is important because we may be able to qualify you for an Income Based Repayment (IBR) plan. If so, you may not have to pay anything at all! (do the budget, don t forget # of dependents) Now that we have all the information we need, I m going to submit it to MDMA for a quote. Once I receive it back, I ll give you a call so we can go over your repayment options. If everything sounds good, then we ll finalize all the paperwork and put the process in motion. Sound good? Excellent. I ll get in touch with you as soon as I hear back from the Loan Processing department. Will you be available to talk a little later? In the meantime, let me give you their website in case you want to learn a little more about the company. The address is www.militarydebt.org/studentloans. After Receiving Quote: Hello, this is from calling you back in regards to your Student Loan Consolidation. I just heard back from the Loan Processing Department and I have some great news. Based on the information you provided, the Department of Education is offering a couple different repayment options (review IBR option if available, or explain Standard and Graduated plans). Doesn t that sound like a much better way to pay back your loans? If Yes: That s great! Do you happen to work in the Public Service industry (i.e. police, fire, teacher, nurse, military, etc.)? (if yes, review the Public Service Forgiveness program) As I said before, there is a onetime set up fee for this service, but keep in mind you will NOT be responsible for making your current payment once the fee is paid. Based on the amount of debt you currently owe, your fee will be $. Once that payment is made, MDMA can submit the paperwork and your 90-day deferment will begin. To make it more convenient, you can have the payment taken from a checking account or a credit card. Which one would be easier for you? Now the sooner you make the payment, the sooner your deferment will begin. What day would be best to make that payment? Great! I just need a little more information and I ll walk you through the paperwork. Split Pay Option: (If a client cannot afford the enrollment fee in 1 payment, we offer split payments.) I understand, that s a large payment to make one time. I can split it into 2 payments for you. The first payment will be and the second payment for the balance. However, I want you to keep in mind that the paperwork will not be filed until the total fee is paid, so it s important to get that in as soon as possible. Is that something you can handle? Great! I just need a little more information and I ll walk you through the paperwork.
Page16 VI. KCCS Selling Steps (continued) A. Steps to selling, simplified. Step One: Introduce program to consumer using script provided below. Make sure that customer understands. Ask the probing questions included to determine eligibility. This script is designed to explain simply. Do not go into too many details at this point. Find out if they want to know more. 1. Do you have any student loans that are federally backed? How many? What is the approximate total dollars? 2. Are you delinquent on them, or wish your payments could be consolidated into one, lower monthly payment? 3. We work with a company we trust that specializes in consolidating all your student loans into one, new loan. The benefits include: One payment to make in the future Potentially lower interest rate on average Shorter term of repayment depending upon payment method 20-25 years 4. How long have you been paying on your student loans? (if ten years or longer, they may not qualify. You can still obtain a quote) 5. Have you ever consolidated your loans before? If yes, have you taken on new loans since then? 6. What is your current monthly payment(s) approximately total? You can choose from the three plans available: Standard a set monthly payment that does not increase, with a 20 year term. Graduated: monthly payment that increases approximately every 2 years (17%) Income-based: based on income and family size. Income verified annually with the IRS, and the monthly payment is based on that. If client asks for any examples, you can use example three possible repayment plans.
Page17 I would like to get a specialized quote for you, so you can determine if you wish to move forward with this. May I ask you just a few questions to get that started? There is no obligation at this point. Use this form to ask the questions and fill in the fillable pdf form for a quote: File Name: Student Loan Quote Form.pdf 6. FASFA Pin. If client does not have it, ask them to request a duplicate. They will be asked security questions that they set up when they originally got their pin, like: Mothers maiden name, favorite color, city born in, hospital born in, name of elementary school, favorite pastime, and more. Once you have this information, transmit the Student Loan Quote Form.pdf by email to: studentloans@militarydebt.org Send a copy to: ccarlson@kccreditservices.com Once we have sent in this package, MDMA takes it from there and works with the client directly. Commission for this sale is $75.00 regardless of the enrollment required of the client.
Page18 B. Step Two: Once the quote has come back to you, contact your customer to discuss. The quote will have the programs they are eligible for, plus the cost and term. Help them decide which one is best for them. The quote will also have the enrollment cost. If they do not have the full amount available, they may choose two, three or four payments. Once they decide all this, help them fill out the following forms: File Name: Student Loan Application.pdf Transmit these documents to: agreements@militarydebt.org Send copy to: ccarlson@kccreditservices.com Tell them to expect someone from Military Debt Management Agency (MDMA) to contact them with a welcome call. Stress that it is very important that they take the call right away. (for your information, if they do not respond in four calls, MDMA will refer the client back to you). If the client is a teacher, public servant, military, or work for a non-profit agency, they may qualify for a forgiveness program. There are certain strict guidelines for this, and they will learn more about this from MDMA on the welcome call. C. Go to artwork in sales portal, and download the form for student loan quotes: Student Loan Quote Form.pdf D. Go to artwork in sales portal, and download the form for student loan application: Student Loan Application.pdf