Transitioning to Direct Loans
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Transitioning to Direct Loans. Pending Legislation. Student Aid and Fiscal Responsibility Act – HR 3221 Passed the House of Representatives 9/17/2009 Mandatory Pell Grant funding 100% Direct Loans July 1, 2009 and forward Expand/modify Perkins Loan Program. Where are we now….

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Pending legislation
Pending Legislation

Student Aid and Fiscal Responsibility Act – HR 3221

Passed the House of Representatives 9/17/2009

Mandatory Pell Grant funding

100% Direct Loans July 1, 2009 and forward

Expand/modify Perkins Loan Program

Where are we now
Where are we now…

  • Transition Planning and Activities

    • Developed Customer Support plan for the transition that includes support for all phases of transitioning

Where are we now1
Where are we now…

  • COD System capacity enhancements for 100% FFELP volume in progress, on time and on taget

  • FSA Customer Service Centers

    • Increased and trained staff

    • Monitor incoming volume

    • COD has dedicated OnBoarding Team to assist setup completion requests and “starts”

Where are we now2
Where are we now…

  • Other FSA systems gearing up

    • myDirectLoan eMPN website

    • NSLDS

    • G5

Where are we now3
Where are we now…

  • Teams designed for targeted support

    • Graduate/Professional

    • Small schools

    • Career Colleges

    • Community Colleges

    • HBCU, HSI, and Tribally controlled colleges

    • Foreign schools

    • Pacific Island Schools

Where are we now4
Where are we now…

  • Selected 4 additional Servicers

    • Great Lakes Educational Loan Services

    • NelNet

    • Sallie Mae


Where are we now5
Where are we now…

  • Training

    • Spring and Summer “new school” DL training

    • Direct Loan processing with EdExpress

    • Business Officers

    • Foreign Schools

    • Extensive new suite of DL training

      • Up to 4x per month after January

Where you are now
Where YOU Are Now…

  • FSA made benign changes to most school profiles

  • FSA made benign changes to most TG mailboxes

  • Does NOT obligate school to process Direct Loans

Where you are now1
Where YOU Are Now…

  • What do you do next to be prepared


      • Complete setup information


      • Request completion of FSA setup

      • 800/848-0978


      • FSA Transition Team

Something old something new
Something old, something new…

  • …to make you comfortable and hopefully not blue…

The same
The same

Virtually all of the regulations


Loan type and interest*



*FFELP PLUS 8.5%, D/L PLUS 7.9%



Origination Fee/Upfront rebate





Direct Loan schools calculate and draw immediate need

Single source – G5

Direct Loan Code

Main Campus/Additional Location

What s new
What’s New?

  • Beginning in March 2010, the eMPN website will become the myDirectLoan website.

  • The myDirectLoan website will continue to allow users to:

    • Complete an electronic promissory note

    • View and print electronic disclosure statements

What s new1
What’s New?

Beginning in March 2010, the myDirectLoan website will be enhanced to:

  • Allow Parents and Graduate Students to complete a PLUS Application

  • Allow Direct Loan borrowers to complete Entrance Counseling

  • Allow endorsers to endorse a PLUS Loan electronically

  • Allow borrowers to electronically appeal credit check decisions during the application process

Plus process new features
PLUS Process- New Features

  • Save all Parent/Student relationships to reduce re-entry in subsequent Award Years

    • Parents are able to submit multiple students and schools during a single application process

  • Allow Parents to resubmit applications for subsequent Award Years

  • Send electronic notifications to all schools included in a completed PLUS loan application

  • Streamline the Application/Promissory Note Process

    • Parent/Student Identifier and School information submitted in the PLUS loan application will be pre-populated on all applicable promissory notes

6 new dl school options
6 New DL School Options

  • Default values will be populated in the School Options fields

  • The new options are not award year specific

  • Default values for the one time update are listed below:

Entrance counseling
Entrance Counseling

The “What You Need” section of the myDirectLoan homepage provides users a guide for Entrance Counseling

Information on Entrance Counseling and a link to the PIN site is provided


  • Similar to Grants/FFELP

    • Confirm eligibility

    • Determine award/loan amount

    • Create award

  • School transmits award/loan origination data to COD

    • Via Common Record and same transmission as Pell Grant data


  • PLUS loan requires credit check

    • Systemic check via Loan Origination submission

    • School check via COD website

    • Or after March 27, 2010… borrower initiate

  • Denial Packet

    • Explanation for denial/appeal process

    • Pre-filled endorser form

    • Materials to submit endorser form


  • Advanced Funded Schools

    • Calculate immediate need

    • Draw funds from same source as other Title IV award funds - G5

      • Flexibility to avoid excess cash

    • Remember Cash Management Rules

      • Must submit data within 30 days of event

      • Actual Disbursement Data substantiates drawn funds

      • ALWAYS submit actual date

Master promissory note
Master Promissory Note

  • One lender, one MPN

    • No linked MPN no disbursement

    • Paper or electronic

    • All MPNs 10-year active

      • Provides borrower mobility

    • School selected options

      • COD School Options screen

      • COD prints paper note options

Booked loan
Booked loan

  • A “Booked” Loan is a GOOD thing…

    • Accepted Origination record, MPN and 1st actual disbursement

    • Is now a binding obligation between borrower and ED

  • 30-Day Warning Report

    • ID’s unbooked loans for school


  • Monthly basis

    • School reconciles internally

      • Financial aid office/business office

    • School reconciles externally

      • COD/G5

    • School Account Statement (SAS)

    • Know where the money is

    • COD Reconciliation Specialists

School services
School Services

  • Default/Delinquency Management

    • Pre-Repayment Counseling

      • Calls begin two months prior to repayment

      • Emails to assist with repayment options

    • Delinquency Counseling

      • Calls begin at 31 days (22 calls)

      • Letters begin at 7 days delinquent (12)

  • Call campaigns ($80k plus)

  • Late Stage Delinquency

Slide 33

Borrower services
Borrower Services

Repayment options tailored to individual need

Standard, Graduated, & Extended

Income Based Repayment Plan

Income Contingent Repayment Plan*

Alternative Repayment Plan*

Public Service Loan Forgiveness*

*Unique to Direct Loan Program

Borrower services1
Borrower Services

Date due flexibility for all repayment plans

Electronic billing/payments

EDA and on-line payment options

Self-Service tools for borrowers

Borrower services2
Borrower Services

Repayment incentives

Online form submission with electronic signature


Some things to consider
Some Things To Consider…


FSA Support














FSA Support





FSA Support




Some things to consider1
Some Things To Consider…

Commonality with Grants

Same person

Same origination process

Same disbursement process

Same transmission vehicle

Some things to consider2
Some things to consider…


Commonality of awards

Same system (COD)

Same institution solution

Work with your software provider to understand the DL process and fields

Some things to consider3
Some things to consider…

COD staff resources for assistance

COD Customer Service Representatives

COD Issue Resolution Specialists

COD Reconciliation Specialists

Questions and comments
Questions and Comments

E-mail contact for more information...