Mary Kosin Director of Financial Aid Luzerne County Community College Cathy Poiesz Loan Processing C

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Mary KosinDirector of Financial AidLuzerne
County Community CollegeCathy PoieszLoan
Processing CoordinatorMessiah CollegeGreg
GearhartDirector of Financial AidMessiah
College

• A Tale of Two Loan Programs
• PASFAA Conference 2008

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A little bit of fall. Why are we in this room?

• What this session is
• An unbiased discussion of the differences in
  processes, procedures, and required resources
  between the programs.
• What this session is NOT
• An attempt to convince anyone to participate or
  not participate in either program, or an attempt
  to start arguments over which program is better,
  cheaper, easier

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• History
• Federally guaranteed loans were first authorized
  43 years ago, in Part B of Title IV of the Higher
  Education Act of 1965 (HEA). For many years,
  these were termed Guaranteed Student Loans.

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• History
• The Higher Education Amendments of 1992 (P.L.
  102-325) renamed the guaranteed student loan
  programs the Federal Family Education Loan (FFEL)
  Program and the Student Loan Reform Act of 1993
  authorized the Direct Loan Program, which is now
  Part D of the Higher Education Act.

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• Several life times ago I sat in my office on a
  day when I was particularly frustrated with the
  Stafford Loan delivery/correction system and
  said, "I wish this was a campus-based program.
  It would be so much easier."

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• It wasnt long until this proposal became reality
  and a spirited discussion ensued about the
  validity of each program,

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which eventually invaded my dreams.
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Reasons Messiah College Switched to Direct
Lending

• One lender
• Easy to keep track of the status of students.
• Easy to explain one process.
• At the time, a cutting edge technology system.
• One of the first EFT systems.
• Electronic transmission of almost all data.
• More control over the process.
• We draw down and return funds when needed.
• Easy loan changes-especially sub/usub
  re-allocations.

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Reasons for FFELP atLCCC

• As a institution, we believe in choice for our
  students. That being said with several lenders
  excluding our students we still feel that they
  should have options as far as their lender.
• Obviously, there were better borrower benefits in
  the past, but we still feel in some cases, the
  fees and repayment benefits surpass those of DL.

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FFELP Processing at LCCC

• Based on my research and our technology, I feel
  we would be unable to process DL as seamlessly as
  FFELP.

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For first time freshmen at LCCC

• If loan question is Yes on the FAFSA, a letter
  is generated which provides information on
  completing a Master Promissory Note and directs
  them to our website for a list of lenders and
  links to the lenders and AES/PHEAA to complete
  the promissory note online.
• Once an MPN has been received by AES, it is put
  on our queue list and we generate a letter asking
  for amount requested and other pertinent
  information for certification.

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The Direct Loan Process at Messiah College
Direct Loan Processing at Messiah College

• Staffing
• Application Process
• Loan origination and disbursement
• Reconciliation
• Why did Messiah College decide to use
  FFELP Loans again?

• Staffing 
• Application Process
•  Loan origination
•  Data flow between school and COD
•  Disbursement
•  Reconciliation
•  Customer Service 

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The Direct Loan Process at Messiah College
Staffing

• When we originally started DL, there was no
  change to our staff levels. We ran the program
  with one student loan processor.
• Some additional tech support was required to deal
  with the then new concepts of PCs and modems
  and data transmission.
• Today we have two people working with loans,
  covering FFELP, DL, Perkins, Nursing and private
  loans.
• Loan Volume 17,000,000 Stafford/PLUS total.
  2,500,000 to 3,000,000 in DL.

• Staffing 
• Application Process
•  Loan origination
•  Data flow between school and COD
•  Disbursement
•  Reconciliation
•  Customer Service 

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The Direct Loan Process at Messiah College
Application Process

• Student indicates Yes to loans on FAFSA.
• Stafford Loan is auto packaged by FAMS (Banner).
• For PLUS Loan, parent must complete a short form
  to collect information not available on FAFSA.

• Staffing 
• Application Process
•  Loan origination
•  Data flow between school and COD
•  Disbursement
•  Reconciliation
•  Customer Service 

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The Direct Loan Process at Messiah College
Loan Origination/Disbursement

• Direct Loan batch is originated and sent to
  COD via EDConnect.
• Response files return and are loaded into FAMS.
• Reports are generated for confirmation/errors on
  loan acceptance-denial-payout.
• Funds are drawn down from GAPS based on actual
  disbursements and are returned when needed.
• Funds can be netted.

• Staffing 
• Application Process
•  Loan origination
•  Data flow between school and COD
•  Disbursement
•  Reconciliation
•  Customer Service 

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The Direct Loan Process at Messiah College
Reconciliation

• Monthly reconciliation is very important.
• Year-end close out on-line with COD must have
  zero balance.

• Staffing 
• Application Process
•  Loan origination
•  Data flow between school and COD
•  Disbursement
•  Reconciliation
•  Customer Service 

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The Direct Loan Process at Messiah College
Why did Messiah College decide to use FFELP Loans
again?

• Borrower Benefits
• -Zero fees
• -PLUS deferral
• Borrower Choice
• Value Added services

• Staffing 
• Application Process
•  Loan origination
•  Data flow between school and COD
•  Disbursement
•  Reconciliation
•  Customer Service 

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Questions?