LASFAC Seeks To Increase Loan Volume
In a joint meeting held on January 7, 1999, members of the Louisiana Student Financial Assistance Commissions Advisory and Ad Hoc Marketing Committees discussed ways to promote the use of the state guarantor, the Louisiana Office of Student Financial Assistance (LOSFA).
The single topic on the agenda was to develop strategies that will increase the agencys share of Federal Family Education Loans that are guaranteed for Louisianas students. The issue centers on the advantages to the state of increasing the income generated by the loan guarantee function.
Changes brought about by passage of the Reauthorization of the Higher Education Act have imposed both positive and negative fiscal impact on guarantors. Not only have their margins of income from traditional sources such as monies collected on defaulted loans and fees earned for preventing loan defaults been reduced, but their share of the costs of paying insured claims has been increased. On the brighter side, guarantors now have the ability to use income generated from fees collected on each guaranteed loan for any educational purpose they wish. This change has created a new opportunity for LOSFA to generate income to offset some of the costs of operating the states educational programs, including its premier scholarship program, the Tuition Opportunity Program for Students (TOPS).
Currently, LOSFA guarantees approximately 38 percent of the Federal Family Education Loans made to Louisiana students. Increasing the states market share of guaranteed loans could add as much as $1.9 million dollars annually in gross revenues or about $1.6 million in net revenues which could offset state appropriations for TOPS. That revenue now goes to not-for-profit guarantors located out-of-state.
Initially, discussion centered on the fact that many state-supported public postsecondary institutions do not use LOSFA as their principal guarantor, but instead use USA Funds, the nations largest guarantor, located in Indianapolis, IN. Several Advisory Committee members indicated that many financial aid administrators do not use LOSFA because they believe there are discrepancies in the service levels between the two guarantors. They remarked that service levels at LOSFA, previously on the rise, have recently seemed to suffer as a result of the intense effort LOSFAs staff has had to make to implement the TOPS program. They concluded that ensuring prompt and complete resolution of processing problems will help reduce the reluctance of financial aid officers to use the services of their state guarantor.
The Committee members also concluded that another helpful strategy should be to increase legislative and public awareness of the financial and educational benefits which accrue to the state as a result of using LOSFAs loan guarantee.
Members of the two committees agreed that their dialogue was a helpful and necessary step to begin the process of developing marketing strategies LOSFA can employ to increase its share of Louisiana loan volume. They decided to meet again to continue their discussion and invite a wider participation group of financial aid administrators. Kathy Sciacchetano, Chairperson of the Advisory Committee, will attempt to schedule another meeting to be held in conjunction with the Louisiana Association of Student Financial Aid Administrators in March, 1999. Watch next months Newsline for an announcement about the time and place of the next meeting.
FAFSA Filing Deadlines
March 1, 1999
Final Deadline for TOPS consideration for 1997 and 1998 high school graduates who have not filed the 1998/1999 Free Application for Federal Student Aid (FAFSA).
April 15, 1999
Priority Deadline for TOPS consideration for 1999 high school graduates to file the 1999/2000 FAFSA.
July 1, 1999
Final Deadline for TOPS consideration for receipt of the 1999/2000 FAFSA from 1999 high school graduates.
NOTE: Students currently receiving TOPS awards must annually file a FAFSA or Renewal FAFSA by the above dates in order to maintain TOPS eligibility (in addition to meeting GPA and credit hours continuation requirements).
News and Updates
Denise Chaisson, formerly of Bank One, now represents Sallie Mae in the state of Louisiana. Paige Hendricks is the new representative for American Express Education Co. Germaine Edwards, formerly at the Charity Campus of Delgado Community College, is now Director of Financial Aid of Delgado at its City Park location. Mike Seybold, formerly of Loyola University, is now Technical Specialist at the City Park Campus of Delgado Community College. Elizabeth Desi has been named Assistant Director of Scholarships at Louisiana State University at Baton Rouge.
Jerry Oubre, of our Program Review Section, Customer Services Division, has been promoted to Auditor III. Jerry received his B.S. degree in finance from Louisiana State University in 1989 and his B.S. degree in accounting from LSU in 1994. Congratulations, Jerry!
Sigmund Morel, one of our Customer Services Representatives, represented LOSFA at the Southwest Association of Student Financial Aid Administrators (SWASFAA) Conference held in Little Rock, AR, November 18-20.
Summer Bridge Extensions. The Common Manual has been revised to reflect a more consistent treatment of borrowers who are enrolled through the end of the spring academic period and who reenroll for the fall academic period. Such a borrower, who qualifies for an extension of the in-school deferment on his loan, may provide a written or verbal notice to his lender advising the lender of his intent to reenroll for the fall academic period. The lender must document the borrowers request and the date on which the borrower anticipates the start of the fall academic period. The lender may retroactively process the summer bridge extension on the strength of documentation of the borrowers in-school deferment eligibility for the fall period. This change is effective for summer bridge extensions processed by the lender on or after January 1, 1999. For more information, refer to LPM #L98-11, available on LOSFAs website.
The U.S. Department of Education has eliminated the use of the term "legal guardian" from the 1999-2000 FAFSA. However, a legal guardian, defined in the 1998-99 FAFSA as "a person who is appointed by a court to be your legal guardian in a legal relationship that will continue after June 30, 1999 and who is directed by a court to support you with his or her own financial resources," will continue to be treated as a parent throughout 1998-99. During this year, a student who has a legal guardian meeting the FAFSA definition is considered dependent whether or not the biological parents are living or deceased. The persons designated as legal guardians supply their financial information and signatures on the FAFSA. For 1999-2000, a student whose parents are deceased will be considered independent regardless of any legal guardianship. A student whose parents are living continues to file as a dependent student, but the FAFSA must reflect the financial information of the appropriate parent rather than that of a legal guardian, unless the financial aid administrator exercises professional judgment.
So long: LOSFA reluctantly bids farewell to two Customer Services Division employees, Diane Pfeifer and Pamela Malveaux, who have accepted student loan positions in the private sector. Diane will be Manager of Policy and Compliance for Sun Tech, Inc. in Jackson, MS. Pam is joining the Bank One marketing team. Good luck, Diane and Pam!
TOPS Certification Process To Be Improved
The Louisiana Office of Student Financial Assistance (LOSFA) will team up with the Orleans Parish School Board and the Louisiana Department of Education (LDOE) to plan and carry out a pilot program designed to streamline the cumbersome TOPS certification process. The trio will develop a plan to electronically certify 1999 high school graduates for TOPS via an electronic exchange of student GPA and core curriculum data drawn from the high school transcript.
Initial discussions about the automated certification process centered on determining the present capabilities of the states schools to transmit and receive data electronically. While all Louisiana school districts have electronic interchange with LDOE, many individual schools do not. At present, LDOE manually certifies and records official transcripts. Additionally, LOSFA conducted a survey of the Internet capabilities of the states 476 high schools, and found that approximately 85 percent of the states schools have access to the Internet.
The Orleans Parish School Board has electronic data interchange capability with its schools and volunteered to be the school participant in the test program. It is hoped that the successful implementation of the pilot data interchange program will lead to full state-wide implementation of electronic certification of TOPS awards for the high school graduates of 2000.
Even schools not participating in the pilot program will get a measure of relief in 1999. The program itself will be easier to administer in 1999 because of several factors which reduce the amount of work needed to verify students eligibility for TOPS. For example, there will be no exceptions to the required two years of the same foreign language, so the certification form and worksheets will not have a separate listing for foreign language exceptions. Also, the July 1 final deadline to submit the FAFSA will shorten considerably the period of time during which schools will receive certification lists.
above chart reflects the number of applicants and compares it to the number of awardees
of the 1997 and also of the 1998 Tuition Opportunity Loan Program (TOPS) awards, as of
January 18, 1999.
TOPS Processing Update
LOSFA reminds Louisiana colleges, universities and technical colleges that the enhanced Master Roster for TOPS is a cumulative listing of students who have qualified for TOPS awards (refer to TOPS BULLETIN #T98-4 issued November 17, 1998). The Master Roster contains all the data needed to determine the amount that may be billed to LOSFA for each TOPS eligible student. This file is updated and available for retrieval every Monday. Schools should retrieve this file weekly, preferably on Monday, to review the weekly changes in student records which affect eligibility and the amount which may be billed.
To prevent overbilling, schools should not transmit a student record on the TOPS Billing Request more than once, unless an adjustment in the billing of that record is necessary. Programmers should ensure that files are re-initialized to zeroes before adding records which have not been billed previously. Do not transmit a cumulative file. Payment for an institutions billing will be forwarded as it is reconciled.
Technical questions regarding file access, file layout or electronic transmission of files should be directed to Terry Tuminello, Director of Information Systems, at 1-800-259-5626, extension 1039, or in Baton Rouge 922-1039, or via e-mail to email@example.com.
Questions regarding individual payments for students included on the TOPS Payment Roster should be directed to Belinda Tate, Scholarship & Grant Program Specialist, at 1-800-259-5626, extension 1151, or in Baton Rouge 922-1151, or via e-mail to firstname.lastname@example.org.
Loan Administration Crucial To LOSFA
|The responsibility for entering and tracking the loans
guaranteed for more than 20,000 new borrowers every year as well as servicing and
tracking the status of loans for more than 360,000 borrowers in the portfolio of the
Louisiana Office of Student Financial Assistance (LOSFA) falls on the shoulders of
the Loan Administration Section. Under the leadership of Student Loan Administrator Linda
Dawkins, this section is one of the four organizational components of the Loan Operations
Division, which is directed by Pat Storey Shannon.
"Our unit administers a loan from beginning to
end," said Dawkins. "We guarantee it, iron out errors, make status changes and,
if nothing goes wrong, handle the loan throughout its life. If there is a serious problem
we cant resolve if the loan becomes delinquent, for instance then it
goes to Pre-Claims. Otherwise, Loan Administration traces the great majority of our
loans for as many years as payments are made on them."
Loan Administration staff includes, front row,
left to right:
Dawkins is also the resource person for NSLDS (National Student Loan Data System), which will usher in another change for Loan Administration. This summer Dawkins participated in testing the new EAGLE II system, the software to which LOSFA will upgrade its loan operations in the fall of 1999. "This upgrade will involve many changes, enabling us to better serve our borrowers and other customers in the student loan industry," Dawkins said.
Loan Administration consists of two subsections: Loan Origination, supervised by Harold Pritchard, and Loan Servicing, supervised by Kelvin Deloch.
Pritchard handles online changes and disbursement questions. His office sees that student funds are disbursed in the proper amounts to uses such as tuition and other fees, room and board, or books, that loans submitted by the colleges are approved for the correct amounts and travel through the appropriate route for approval, that lenders receive their Notices of Guarantee, or duplicate notices if necessary, and that students who need them receive their duplicate promissory notes.
When a loan application enters LOSFA from a college or lender, it goes first to Loan Origination. "Most schools and lenders have the capacity to place student loan applications onto the system electronically using WhizKid software," Pritchard said. "This generates a hard copy of the Application/Promissory Note which is mailed to the student who adds references to the note, signs it and mails it to the lender." Those schools which dont have this capacity send paper applications to Loan Origination, where they are checked for accuracy and completeness before being entered manually.
Loan Originations staff of eight handles online changes relating to social security number, name, prior defaults and PLUS Loans denials. They also process updates concerning eligibility related to estimated family contribution (EFC), disbursement dates, disbursement increases or reductions, and cancellations. In addition, the unit handles loan cancellations and the two kinds of guarantee fee billing, standard fee billing and Fee Express, which is LOSFAs automated fee billing system.
With the one percent insurance fees paid by lenders on an estimated annual loan volume of $200 million, Loan Administration generates approximately $2 million annually in fees for LOSFA.
LOSFA urges all lenders to use Fee Express. "Its an advantage to them and an advantage to us," said Pritchard. "It cuts processing time tremendously for lenders." Automated fee billing is also more accurate, because with less manual intervention, there are fewer errors. For those lenders still on standard fee billing, fees paid are posted manually to each account. Loan origination also mails out Notices of Guarantee to lenders and schools.
Deloch deals more with lenders and servicers than with schools and borrowers. Although he deals with fewer people, his unit handles greater loan volume. "I make sure that the lenders portfolios and our EAGLE System database reconcile," Deloch said.
Deloch supervises a staff of three which services the various loan accounts. "We update borrower accounts from promissory status to repayment status," said Deloch. "We place eligible deferments on borrower accounts, update demographics such as changes in address, telephone number and name and enter into the database those borrower accounts which have been paid in full."
Delochs unit also handles loan reinstatements, processes status changes and loan transfers, and researches rejected loan status changes. It processes reallocations which may be required when a loans subsidized status or unsubsidized status is changed, and it contributes to the daily, monthly and quarterly balancing and reporting for required federal reports.
Common Manual Revisions Clarify Borrower Eligibility
There are several ways a borrower may regain eligibility if he or she inadvertently exceeds an annual or aggregate loan limit, according to LPM L98-13 published December 29, 1998. The borrower may repay the excess funds in full; he or she may make mutually satisfactory repayment arrangements with the lender; the borrowers school may be authorized to adjust the excess loan amount; or the borrowers school may reallocate funds between a subsidized Stafford loan and an unsubsidized Stafford loan for which the borrower is eligible. Of course, if the borrower has exceeded the annual or aggregate loan limit as a result of providing false or misleading information, he or she must repay such loans in full to regain Title IV eligibility.
Revisions found in subsections 5.2.A., 5.2.E., 5.7, 8.9, CCI 8.9, 8.10, CCI 8.10, and 9.2 of the Common Manual which clarify borrower eligibility are effective for loan applications certified by the school (or in the case of a consolidation loan application, received by the lender) on or after April 1, 1999, unless implemented earlier by the guarantor.
In addition, the Common Manual has been updated to reflect that schools now use National Student Loan Data System (NSLDS) financial aid history information in determining whether borrowers have prior defaults.
Subsection 5.2.E. also indicates that a school may rely on the information provided by the student or parent borrower during the application process and on NSLDS financial aid history information (or a transcript from another school in the case of a mid-year transfer student), unless the school receives conflicting information, in order to determine whether the student or parent borrower has ever defaulted on any Title IV loan. The school must reconcile all conflicting information before delivering any funds.
On the Road Again.....
LOSFA Upgrades Its Technical Capabilities
Bruce Moberley of Information Systems monitors the status of the backup functions on the new Dell 6300 PowerEdge Server.
of the recurring and ongoing objectives in LOSFAs strategic plan is to stay in step
with rapidly changing technology. LOSFA has recently taken action to effect several
important technological changes which will speed internal operations, improve staff
efficiency and productivity and enhance customer service.
A new imaging system by RACOM has arrived. While a scanner produces a separate file for each image, Racoms system will scan thousands of promissory notes or checks, organize and index the images, and create a database of images. Loan applications and claim packages documents which must be kept for long periods of time can be archived and easily found with this equipment. It will be used extensively by LOSFAs Legal, Collections, Fiscal and Executive Divisions and Claim reviewers.
Also included in the recent technology upgrade was the installation of the Mosaix autodialer. It will increase the productivity and efficiency of the PreClaims and Collections units (see November Newsline).
LOSFA Conducts 1998 Guidance Counselor Workshops
Louisiana high school guidance counselors attended seven workshops conducted around the state between December 2 and December 10 by members of our Customer Services Division.
The workshops, which were held in Alexandria, Shreveport, Monroe, Lake Charles, New Orleans, Lafayette and Baton Rouge, were attended by a total of 579 guidance counselors representing 342 of Louisianas 476 high schools (72 percent).
The workshops covered a wide variety of topics including an overview of state scholarship and grant programs, the START Saving Program, instructions on how to complete the Free Application for Federal Student Aid (FAFSA), how to access a variety of financial aid-related information on the Internet and an update on LOSFAs Trailblazer program. Also included was a session on "Basics of Financial Aid" conducted by financial aid administrators from various colleges and universities around the state and members of the lender community.
The presentation which generated the most interest, discussion and questions was, of course, an in-depth session on the Tuition Opportunity Program for Students (TOPS). Included in the presentation was a program update on 1998 TOPS awards, a review of program rules and regulations, a review of potential pitfalls for students in the application process and a preview of the 1999 LOSFA/Orleans Parish/Louisiana Department of Education Pilot electronic certification process.
LOSFA wishes to extend our special thanks to sponsors Bank One Louisiana, Campus Federal Credit Union, CitiBank, Crestar Bank, Educaid, First United Bank, Hibernia National Bank/Class Credit, Independence Federal Savings Bank, Louisiana Education Loan Authority (LELA), Union Planters Bank and Whitney National Bank for their financial support, which was instrumental in the conduct of these important outreach workshops.
LOSFA would also like to thank the financial aid administrators who donated their time and talents to conduct the "Basics of Financial Aid" sessions: Melanie Amrhein (Louisiana State University, Baton Rouge), Raymond Boswell (Louisiana State University, Alexandria), Edgar Chase (Louisiana State University, Shreveport), Teresa Compton (Louisiana College), Chuck Dobrinick (Northeast Louisiana University), Emily Jones (Xavier University of Louisiana), Mary Sue Rix (Centenary College), Taina Savoit (McNeese State University), Mike Seybold (Delgado Community College), Barbara Shaffer (Southern University Baton Rouge) and Denise Spellman (University of New Orleans).
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