Electronic Processes

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Electronic Processes

• or How We Learned To Stop Killing Trees and
  Going Postal

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Presentation Overview

• Importance of Standards
• Business Critical Paper Exchanges
• Replaced by Student Loan
• Data Exchange Standards
• Loan Lifecycle Existing Electronic Exchanges
  Chart

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Presentation Overview

• Origination Standards Kristi Blabaum, Great
  Lakes
• Interim Servicing / Repayment Servicing Sandra
  Masur, Nelnet
• Claim Filing / Assignment to ED Don Dugan,
  NYHESC
• Anticipating the Future Olin Hyde, JustIQ

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Importance of Standards

• The wonderful thing about standards is that
  there are so many of them to choose from.
• Grace Hopper

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Importance of Standards

• Postsecondary communication is complex
• Facilitate efficiency
• Make training and cross-training easier
• Reduce change for the sake of change

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Student Loan Data Exchange Standards

• Origination / Data Loading
• Change Transactions
• Enrollment
• Account Maintenance / Status Reporting

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Student Loan Data Exchange Standards

• Default Aversion Request
• Claim Filing
• Financial
• Assignment for Collection

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Existing Electronic Exchanges

• Data Exchange Chart

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Origination Standards

• Kristi Blabaum
• Great Lakes

KB
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Origination Standards

• CommonLine
• Application
• Response
• Change Transactions
• Disbursements
• Used between school and lender/guarantor
• FAMS support
• Benefits

KB
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Origination Standards

• Common Record CommonLine
• Request (Application and Change)
• Response
• Disbursement
• Used between school and lender/guarantor
• FAMS support
• Benefits

KB
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Origination Standards

• Common Account Maintenance
• Used between lender and guarantor
• Benefits

KB
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Interim Servicing / Repayment Servicing

• Sandra Masur
• Nelnet

SM
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Student Aid Internet Gateway (SAIG)

• SAIG is the current method for Schools,
  Guarantors, Lenders, Servicers, and State
  Agencies to exchange information electronically
  with the Department of Education.

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SAIG Services Available

• NSLDS batch Data
• Cohort Default Rate reports
• Financial reporting information
• Federal Grant payment information
• Direct Loan files
• Student Application

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Enrollment Reporting

• Schools to NSLDS
• NSLDS to Guarantee Agencies
• Guarantee Agencies to Lenders
• National Clearinghouse to Lenders and Guarantee
  Agencies
• CAM

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Account Maintenance / Status Reporting

• NSLDS Lender Manifest
• CAM
• NSLDS submission to the Department of Education

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LaRS Reporting

• Replaced ED-Form799 Paper Reporting for Interest
  and Special Allowance Payments
• Implemented 2002

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Claim Filing / Assignment to ED

• Don Dugan
• NYHESC

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Common Claim Initiative (CCI)

• Process to standardize forms and electronic
  layouts for DAARs and Claims submittal to
  guaranty agency
• July 1992 HEA mandated the Secretary shall, by
  regulation develop in consultation with the
  student loan community, prescribe standard forms
  and procedures regarding(G) claim filing
• Dec 1992 March 1995 Ad Hoc Committee for
  Standardization developed forms and procedures to
  comply with the above regulation language
• March 1995 Ad Hoc Committee submitted the
  Preclaim Request Form (now DAAR) and Claim Form
  to ED for approval

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CCI continued

• Feb 1996 ED issues comments on March 1995
  submission
• Dec 1996 Forms resubmitted to ED as final
• Feb 1998 Claim form and Edit Table approved by
  Common Manual
• August 1998 July 2001 Electronic file layouts
  developed
• 2002 Present Gradual industry implementation of
  electronic process. Implementation of electronic
  DAAR is further along than the implementation of
  electronic claim

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New York Experience with CCI - Before

• New York receives over 500,000 DAARs and 70,000
  claims annually
• All of these forms had to be manually data
  entered
• Payment history layout and collection history
  layout for each lender/servicer were stored in
  filing cabinet.
• 21 staff that performed data entry and claim
  review

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New York Experience with CCI - After

• 97 of 500,000 DAARs received electronically
• 66 of 70,000 Claims received electronically
• Filing cabinets used for other purposes
• Staff reduced from 21 to 10 despite substantial
  growth in DAARs/Claims received

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Default Aversion Assistance Request (DAAR)

• Not earlier than the 60th day and no later than
  the 120th day of delinquency a lender must
  request default aversion assistance from the
  guaranty agency.
• Electronic Layout mirrors the DAAR Form
• Chapter 10 CAM Documentation Manual
• Loan Level Processing
• Submittal, Return, Resubmittal Flow
• Update and Cancellation Flow

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Claim Requests

• 34 CFR 682.402 and 34 CFR 682.406 regulations
  governing filing timeframes
• Chapter 11 Claim Submittal and Chapter 12 Claim
  Disposition of CAM Documentation Manual
• Electronic layout mirrors Claim Form
• Record type 55

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Guaranty Agency Financial Report (GAFR)

• GA use the GAFR to request payments from and make
  payments to the Department of Education
• ED also uses this information to monitor agencys
  financial activities
• Annual, Monthly and Bi-monthly submittal
• SAIG EDCONNECT
• Immediate Confirmation
• Improved Communication
• Ease of Audit Function
• Reduced Payment Timeframe

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Assignment

• Mandatory (34 CFR 682.409)
• Cartridge limit 5000
• SAIG EDCONNECT
• Disability (cartridge process)
• Accept process is manual
• Bankruptcy (electronic file)
• Electronic accept process
• SAIG will eliminate the problems of lost
  cartridge, destroyed cartridge, labeling and
  re-labeling of cartridges, file size limits etc.

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Treasury Offset Program (TOP)

• Currently done by cartridge
• Switching to SAIG - EDCONNECT
• Converting to SAIG will give same benefits as
  with Assignment
• Immediate confirmation of receipt of the file

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Anticipating the Future

• Olin Hyde
• JustIQ

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Skills to Thrive in the New Future

• The new realities
• Private lending
• Reduction in FFELP margins
• Threatened elimination of FFELP
• Elimination of PLLs we knew them ? D2C
• Diminishing securitization margins
• Require organizations to hone competitive traits
• Agility ? Move Fast
• Efficiency ? Do more with less
• Customer ? Know, own nurture

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Organizational Agility

• Respond quickly to regulatory and market changes
• New Business Model
• New Loan Products
• New Target Markets
• Improve forecasting

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Operational Efficiency

• Streamline processes to increase efficiency and
  effectiveness
• Manage more loans with the same staff
• Increase margins
• Decrease operational costs
• Implement new technology

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Customer Centricity

• Understand borrower behavior and respond to
  market needs
• Deliver the best products to the right targets
• Improve customer service levels through faster
  response times and increased access to
  information
• Create effective campaigns to reach the right
  audience and increase response rates

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Implementing Technology

• Key technology solutions
• Data aggregation
• Business intelligence and analysis tools
• ROLAP
• Integration of all systems
• XML, XSML, etc.
• Web services

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Implementing Technology

• Key technology solutions
• Focus on large costs
• Replace legacy systems ? move toward web-enabled
  apps
• Reduce lead generation costs increase
  conversion rates
• Ensure Loan Origination meets business needs
  (private, etc.)
• Control servicing costs
• Customer Relationship Management

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