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Go With The Flows: Identifying the FFELP process flow that is right for your institution

Go With The Flows: Identifying the FFELP process flow that is right for your institution. Presented by: Julie Meyer and Stephanie Wilson Missouri Department of Higher Education. Agenda. Players and roles Definitions Comparison of application flow options

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Go With The Flows: Identifying the FFELP process flow that is right for your institution

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  1. Go With The Flows:Identifying the FFELP process flow that is right for your institution Presented by: Julie Meyer and Stephanie Wilson Missouri Department of Higher Education MASFAP spring 2006

  2. Agenda • Players and roles • Definitions • Comparison of application flow options • Suggestions for how to determine which flow is right for your school and borrowers MASFAP spring 2006

  3. Who Are The Players? • The role of the school • Determines its processes and partners/vendors (the decision maker) • The role of the lender or disbursing agent • Approves the prom note for disbursement • Disburses funds according to the school’s instructions MASFAP spring 2006

  4. Who Are The Players? • The role of the guarantor • Provides insurance for the loan • Is required to pay its Federal Fund a 1% default fee for loans guaranteed • The role of the servicer • Administers repayment processes MASFAP spring 2006

  5. Definitions • Process flow: The path a loan follows; the steps involved in applying for a loan • Origination: “Front-end” processes involved in making a new loan; includes • School certification • Borrower processes, such as signing the prom note • Guarantee and approval processes • Disbursement processes MASFAP spring 2006

  6. Definitions • CommonLine: Industry initiative to develop and use common file layouts, terms, and processes • Most commonly used version is CL4 • Common Record: CommonLine (CRC) currently being tested and piloted within the industry • Types of files: • App send • Change send • Response • Disbursement-related MASFAP spring 2006

  7. Definitions • School-initiated process: School initiates the loan application by sending one of the following to the guarantor: • CommonLine application send file • School certification via the web • Paper certification • Borrower-initiated process: Borrower initiates the loan application via the web or telephone MASFAP spring 2006

  8. Definitions • Guarantor flow: Loan data is sent to the guarantor first. The guarantor then notifies the lender, servicer, and/or disbursing agent. • Lender flow: Loan data is sent to the lender first. The lender then notifies the guarantor. MASFAP spring 2006

  9. Definitions • Guarantee and print (GP):School certifies the loan and sends a complete loan record to the guarantor. If non-serial, borrower must then sign a prom note electronically or via paper. • Print and guarantee (PG):School sends a partial loan record to the guarantor. Borrower must complete missing information in order to guarantee the loan. MASFAP spring 2006

  10. Definitions • Guarantee only (GO):All necessary information is provided before submitting for the guarantee, including prom note signature if non-serial. • Other flows • Print only (PO) • Credit only (CO) • Etc. MASFAP spring 2006

  11. What are the processing flow options? MASFAP spring 2006

  12. School-Initiated Guarantor GP Flow • School certifies loan via CL app send file or via web • Guarantor guarantees loan and forwards information to lender and/or disbursing agent • Non-serial borrowers complete prom note via paper or web • Disbursing agent approves loan for disbursement MASFAP spring 2006

  13. 3If new borrower: lenders request signed prom note 2Guarantor guarantees loans; forwards information to lenders 1School certifies loans; sends certification to guarantor 4New borrowers sign promissory note, return to lenders (paper or electronic) 5Lenders notify guarantor of promissory note approval School-Initiated Guarantor GP Flow MASFAP spring 2006

  14. School-Initiated Guarantor GP Flow • Recommended for schools: • With sophisticated FAM Systems that are able to generate and send CommonLine App Send files <OR> • That can provide most or all of the information needed to guarantee the loan • Borrower/student name, SSN, DOB, etc. • School, lender, and guarantor information • Loan type and certification amount MASFAP spring 2006

  15. School-Initiated Guarantor PG Flow • School submits loan information via CL app send file or via web • Borrower completes application and prom note via paper or web • Guarantor guarantees the loan and notifies the lender and/or disbursing agent • Disbursing agent approves loan for disbursement MASFAP spring 2006

  16. 3Borrowers provide missing information (provide lender, sign promissory note, pass credit check, etc.) 4Guarantor guarantees loans 2Guarantor prints & mails prom note OR makes available for e-sign on the web 1School submits loan information to guarantor 5Guarantor notifies lender or disbursing agent School-Initiated Guarantor PG Flow MASFAP spring 2006

  17. School-Initiated Guarantor PG Flow • Recommended for schools: • With FAM Systems that are able to generate and send CL App Send files <OR> • PLUS loans or other loans not yet credit approved <OR> • That cannot provide all of the information needed to guarantee the loan • Borrower or student info not complete • Lender or guarantor not known MASFAP spring 2006

  18. School-Initiated Guarantor GO Flow • School provides all necessary loan information via CL app send file or via web • Guarantor guarantees loan • Disbursing agent approves loan for disbursement (if valid prom note on file) MASFAP spring 2006

  19. School-Initiated Guarantor GO Flow • Recommended for schools: • Gathering all FFELP loan information at the time of packaging/awarding (e.g., lender) <OR> • With a large serial population <OR> • Using loan types not requiring a credit check <OR> • Using the web for online entry and real-time guarantee MASFAP spring 2006

  20. School-Initiated Lender Flow • School certifies loan via CL app send file or via lender’s web product • Non-serial borrowers complete prom note via paper or via lender’s e-sign process • Lender/disbursing agent: • submits loan information to guarantor • approves loan for disbursement MASFAP spring 2006

  21. 3Borrower completes – credit check performed, prom note signed 2Lender makes loan available to borrower online 1School initiates loans with lender 4Lender notifies guarantors of loan and prom note approval School-Initiated Lender Flow MASFAP spring 2006

  22. School-Initiated Lender Flow • Recommended for schools: • Partnering strongly with one or two lenders; using that lender’s web loan delivery product • ELM • Credit checks • E-sign <OR> • That can provide most or all of the information needed to guarantee the loan • Borrower/student name, SSN, DOB, etc. • School, lender, and guarantor information • Loan type and certification amount MASFAP spring 2006

  23. Borrower-Initiated Lender Flow • Borrowers apply for loans via lender’s website • Credit check performed • Application signed electronically • Lender sends school cert request; school certifies • Lender/disbursing agent submits loan for guarantee • Lender/disbursing agent disburses loan MASFAP spring 2006

  24. 3School certifies online or via CL app send file 1Borrowers apply for loans via lender’s website 2Lender requests school certification 4Lenders notify guarantor of loan and prom note approval Borrower-Initiated Lender Flow MASFAP spring 2006

  25. Borrower-Initiated Lender Flow • Recommended for schools: • Strongly partnered with one lender or disbursing agent; school may be: • Using one lender with multiple guarantors • Using lender’s web loan delivery product • ELM <OR> • Heavily using PLUS or other loan types requiring credit checks MASFAP spring 2006

  26. How do I determine which flow is right for my school? MASFAP spring 2006

  27. Factors to Consider • How much information does my school gather at the time of awarding? • Is the lender always known? • Is the requested amount known? • Are credit checks a part of the application process? • Are credit approval rates generally high or low? MASFAP spring 2006

  28. Factors to Consider • How reliant is my school on its FAMS? Is my FAMS capable of supporting CommonLine 4 (or 5)? • Many vendors no longer support CL3 • Common Record: CommonLine (CRC) still being piloted MASFAP spring 2006

  29. Factors to Consider • How web-savvy is my student and/or parent population? Are they willing to: • Initiate or complete an application and/or credit check on the web? • E-sign? MASFAP spring 2006

  30. Factors to Consider • Which vendor(s) does my school want to work with based on borrower benefits or other factors? • ELM • Private loan borrowing • Upfront fees • Rate relief programs during repayment MASFAP spring 2006

  31. Thank you for your time and attention! MASFAP spring 2006

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