January NewsLine



Mary Kaye Eason, Director of Financial Aid at McNeese State University and Chairperson of the Advisory Committee, retired from her position as financial aid director at McNeese Dec. 19. Taina Savoit replaced Mary Kaye as director Jan. 1. Edgar Chase of Louisiana State University in Shreveport will replace Mary Kaye as Chair of the Advisory Committee.

Sallie Mae offers a free Online Scholarship Service at www.salliemae.com. Sallie Mae's service gives individuals exclusive access to the College Aid Sources for Higher Education (CASHE). CASHE, serving students, parents and high school guidance counselors for more than 18 years, is one of the largest, most recognized private financial aid resources available and offers information about scholarships, fellowships, grants and work/study programs. It is regularly updated by EDTECH Inc. Questions about the CASHE database should be directed to (800) 462-2743. To speak with a financial aid expert about college financing issues, call the College Answer hotline at (800) 891-4599 Monday-Friday, 9 a.m.-9 p.m. ET.

A belated welcome to Gus Wales, who joined the Customer Services Division in August as Communications Manager. Gus brings to LOSFA 25 years of private sector experience in advertising, marketing and public relations, including 11 years as president of Gus Wales Creative Services. Welcome aboard, Gus! Also a hearty greeting to new Publications Supervisor Clifton Coles, who will coordinate LOSFA's publications including the Blue Book and Newsline. Cliff comes to us after five years at the Louisiana Department of Wildlife and Fisheries where he was a staff writer for the Louisiana Conservationist magazine and supervised the department's news unit.

Also new to LOSFA is Linda Dawkins, who replaces retiree Sylvia Hunt as Student Loan Administrator over Loan Origination and Servicing. Linda brings 27 years of experience to the position, having spent 18 years with the Louisiana State Legislative Auditor and seven years with the Louisiana Department of Revenue and Taxation. She hopes to combine her background in auditing and financial accounting with management skills acquired while working toward her certification as a Certified Public Manager.

Loan Operations Division Director Pat Storey became Pat Shannon Friday, Oct. 31, when she married Frank Shannon in Baton Rouge. Congratulations, Pat and Frank!

Lenders may now access disbursement and status information on loans guaranteed by LOSFA via USA Group's OnLine Loan Connection on the USA Group website located at www.usagroup.com. For a demonstration, lenders should first select "Solutions for Financial Institutions," then select "OnLine Loan Connection C EAGLE."  To begin participation, the application consists of an OnLine Loan Connection Access form and Web Communications Agreement, and may also be obtained by calling LOSFA's Customer Services at (800) 259-5626, ext. 1012, or USA Group at (800) 428-9250, ext. 6560. After the paperwork has been completed, USA Group will assign each participating lender a Teleview User ID and password.

LOSFA and USA Group will provide joint loan program training in conjunction with the LASFAA Spring Conference in Natchitoches. Next month's Newsline will contain more details.



LOSFA to Continue Participation in Consolidation Program

The Louisiana Office of Student Financial Assistance will continue to participate in the FFELP Consolidation Loan Program under the terms of the Emergency Student Loan Consolidation Act (ESLCA) of 1997. LOSFA will continue to provide full service to Louisiana students and their parents, as well as to those participating lenders who have also expressed their commitment to continue to offer consolidation loans.

The ESLCA was signed by President Clinton on Nov. 13 and offers several new benefits to borrowers under the FFELP Consolidation Loan Program. In addition to FFELP loans, Federal Direct Student Loans can now be included in a FFELP consolidation. Loan rates are annually variable but are capped at an interest rate of 8.25 percent, replacing the previous fixed interest rate which was calculated on the weighted average rate of the loans being consolidated, rounded up to the nearest whole percent. For the period ending June 30, 1998, loans made under the ESLCA will carry the capped rate of 8.25 percent. For most borrowers, this change will result in substantial savings of interest.

Another new borrower benefit results from a change in the payment of subsidies on some consolidation loans made under the ESLCA. It provides that for the portion of the consolidation loan which is made up of subsidized Federal Stafford Loans and/or subsidized Federal Direct Loans, USDE will pay the interest which accrues during periods of deferment. The borrower is responsible for paying the interest during the deferment period on the remaining portion of the consolidation loan. Prior to the ESLCA, FFELP consolidation loans were not eligible for interest subsidies unless all the underlying loans were subsidized Stafford loans.

LOSFA's participation under the provisions of the Act will allow the agency to pass these benefits on to borrowers. These provisions of ESLCA are effective for applications received on or after Nov. 13, 1997, and before Oct. 1, 1998. Some or all of the provisions may be extended or revised if they are included in the Reauthorization of the Higher Education Act scheduled for later this year.

The ESLCA also prohibits discrimination against borrowers by lenders based on the type and number of eligible loans included in the consolidation, the institution attended by the borrower, the interest rate applied to the consolidation loan and the types of repayment schedules offered to borrowers.

Pending further policy clarification which is expected from USDE, LOSFA will continue to operate its consolidation program as before, incorporating the newly established provisions of the ESLCA. LOSFA will still require that at least one of the underlying loans be guaranteed by the agency. Married couples will not be able to combine their individual loans for consolidation. Borrowers who have defaulted loans must show that they have made satisfactory payment arrangements before their loans can be consolidated. The minimum loan balance required for consolidation will continue to vary according to each lender's policy.

Because of the complexity of administering the new rules, LOSFA understands that some lenders/servicers may secure separate promissory notes for each type of loan being consolidated. The purpose of this procedure is to allow separate tracking of the different loan types in order to implement the provisions unique to each type of loan. LOSFA will accept, but does not require, multiple notes on a single consolidation loan. However, only one default claim, which must include all underlying loans, will be accepted for a consolidation loan. Claims filed on only a portion of a consolidation loan will be returned to the lender or servicer with instructions to file on the entire consolidation loan.

For more information about LOSFA's Federal Consolidation Loan Program, call Customer Services at (800) 259-5626, ext. 1012.




Pre-Claims Averts Defaults

The goal of the Pre-Claims Section of the Louisiana Office of Student Financial Assistance is to prevent defaults on student loans. To achieve this goal, 24 employees work closely with borrowers, lenders and schools, emphasizing the need to give borrowers personal attention. Led by Administrator Lynda Downing and Assistant Administrator Robert Pollage, Pre-Claims broke its own record in October by preventing 2,355 accounts from entering default, the second highest number ever achieved for aversions in a single month. Salvaged accounts totaled $11,572,175, the highest dollar amount ever achieved for aversions in a single month.

When LOSFA is notified that an account has reached 90 days of delinquency, the Pre-Claims staff initiates a series of collection letters and telephone contacts. A report is sent to the school that originated the loan so that the school may attempt contact as well.

Contact with delinquent borrowers consists of informing them about the delinquency, describing the options available to prevent default and warning the borrowers about the negative consequences of default. The Pre-Claims representative provides information about deferments and forbearances and how to apply for them. Pre-Claims also mails forms to borrowers when requested. Often, a Pre-Claims representative initiates 3-way conference calls which include the borrower and the lender to assist in resolving communications problems which may prolong delinquency.

A sub-section of the Pre-Claims Section is the Skip Trace Unit. These collectors are experts in locating borrowers who have moved and not advised their lenders of their new addresses. There are many resources available to assist the Skip Trace crew in locating these borrowers. The Skip Trace function is performed for both the Pre-Claims and Collections units. These collectors work diligently to locate the borrower as soon as possible so the default may be prevented or, in the case of a Collections account, so the borrower can resume payments.

Another sub-section is the Autodialer Unit. These collectors are responsible for outgoing telephone contact with borrowers in Pre-Claims and Collections. The autodialer allows them to contact thousands of borrowers each week with a personal telephone call. The borrowers are then instructed on proper procedures to follow.

Most borrowers appreciate that Pre-Claims is trying to help them, not harrass them. Once a staff member explains how serious a defaulted student loan can be to a borrower's financial future, the borrower is usually receptive to the Section's assistance.

Pre-Claims tracks its progress on a daily and monthly basis to determine how many accounts it actually prevents from defaulting.

During FY 1996-97 the section prevented 22,802 accounts from defaulting, representing a dollar amount of $94,346,153.

LOSFA is now able to accept Pre-Claim assistance requests by tape submission. Besides saving lenders time and labor, this function allows the section to begin its contacts with delinquent borrowers much sooner. For more information, call Pre-Claims at (225) 922-1076 or (800) 256-3137.




Who is a Parent?

Now is the time for seniors to begin work on the Free Application for Federal Student Aid (FAFSA) for the 1998-99 school year. Section C, questions 38-43, is designed to determine whether a student is considered dependent or independent for the purposes of determining his or her need for financial aid. The overwhelming majority of high school seniors will answer "No" to all the questions in section C. They will be considered dependent students and must include their parents' financial information on the FAFSA. Therefore, defining exactly who is considered to be a parent is very important.

Federal methodology defines parents as:

Grandparents and/or other people with whom the child lives or who provide financial support to the child are not considered the parent unless they are the child's legal guardian. Foster parents are not considered the parent of a child.

In the case where a parent is recently widowed, only that surviving parent's tax information should be included on the FAFSA. If the parents had filed their taxes jointly, then extract the surviving parent's information and use only that to fill out the FAFSA.

In the case of divorced parents, it is the one with whom the child lives the most that is the "parent" and whose income information should be provided on the FAFSA. In cases where custody has been split evenly, students should determine which parent provides the most financial support and use his or her information.

There are some situations where a child of divorced parents may live with one parent while the other parent claims the child as a dependent on income tax returns. In this situation, FAFSA requires the information of the parent with whom the child has been living, regardless of which parent reports the child on his or her income taxes.

Remember students must file the FAFSA as soon as possible after they and/or their parents have received 1997 tax information. The FAFSA must be filed no later than June 1 in order to meet the priority consideration deadline for the TOPS program. Call LOSFA's Customer Service Division for more information on filling out the FAFSA, for answers to questions and for other aspects of state and federal student financial assistance at (800) 259-5626, ext. 1012.




Commission Proposes Scholarship/Grant Procedures

Proposed rules and regulations for the State's Scholarship and Grant Programs are going before the public beginning Jan. 20, 1998. The Louisiana Student Financial Assistance Commission approved final revisions to the document governing administrative aspects of the Tuition Opportunity Program for Students (TOPS) and other scholarships and grants at its Dec. 9 meeting. Publication in the Louisiana Register of the official Notice of Intent was authorized, and the proposal will appear Jan. 20. The public will have 30 days to comment on the proposal.

The document was submitted to the Commission after many months of meetings between LOSFA staff and the LASFAC Advisory Committee. Staff proposals were reviewed by an Ad Hoc Committee of the Commission before being approved.

The document covers all aspects of administration of LOSFA's Scholarship and Grant programs except for the Student Tuition Assistance and Revenue Trust (START) Program, which is administered by the Louisiana Tuition Trust Authority (LATTA). Included in the document are rules for the four TOPS programs, the Rockefeller State Wildlife Scholarship and the State Student Incentive Grant (SSIG). There are also sections on responsibilities of high schools, school boards and the Louisiana Department of Education. Proposed rules will be effective for the 1998-99 award year.

"These rules are based on current statute,"  said Winona Walker Kahao, director of LOSFA's Scholarship and Grant Division.  "There will likely be a special session this spring to amend certain statutory requirements of the TOPS program. The expected amendments will result in revisions to the proposed rules."

The complete proposal is available at the LOSFA website (www.osfa.state.la.us/policy4.htm).




LOSFA Guidance Counselor Workshops Attract Record Numbers

A record number of high school guidance counselors attended seven workshops conducted around the state between Dec. 3 and Dec. 15 by members of the Louisiana Office of Student Financial Assistance's Customer Services Division.

The workshops, held in Lake Charles, Metairie, Lafayette, Alexandria, Shreveport, Monroe and Baton Rouge, were attended by 663 guidance counselors (up from 350 last year) representing 378 of Louisiana's 435 high schools (87 percent).

The workshops covered a wide variety of topics. Counselors convened in general sessions for 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 LOSFA's Trailblazer Program. Each counselor could also choose to attend a session on either  "Basics of Financial Aid,"  intended for counselors new to the financial aid process, or "Professional Judgment," conducted by financial aid administrators from various Louisiana colleges and universities.

The presentation which generated the most discussion was an in-depth explanation of the new Tuition Opportunity Program for Students (TOPS). Attendees received a draft of the "Recommendations for Enhancing the Tuition Opportunity Program for Students,"  which was submitted Dec. 1, 1997, to the joint Education Committees of the Louisiana Legislature. The recommendations were drafted by an ad hoc working group appointed by the Governor's Office of Education. Counselors, principals and superintendents were urged to forward any comments on the recommendations to the chairmen of the House and Senate Education Committees, Rep. Charles McDonald and Sen. Tom Greene.

LOSFA extends special thanks to sponsors Bank One Louisiana, Cameron State Bank, Campus Federal Credit Union, Central Bank, Crestar, Deposit Guaranty National Bank, Educaid, Education First, First National Bank of Commerce, First United Bank, Hibernia National Bank/Class Credit, Louisiana Public Facilities Authority, Union Planters Bank and Whitney National Bank for their financial support, which was instrumental in the conduct of these important outreach workshops.

LOSFA also thanks the financial aid administrators and counselors who conducted the "Professional Judgment" sessions: Melanie Amrhein (Louisiana State University, Baton Rouge), Raymond Boswell (Louisiana State University, Alexandria), Janice Chapman (Bossier Parish Community College), Edgar Chase (Louisiana State University, Shreveport), Teresa Compton (Louisiana College), Pat Cottonham (University of Southwestern Louisiana), Chuck Dobrinick (Northeast Louisiana University), Mary Kaye Eason (McNeese State University), Leslie Henry (University of New Orleans), Emily Jones (Xavier University of Louisiana), Jennifer McNeill (University of New Orleans), Deborah Paul (Southern University), Mary Sue Rix (Centenary College) and Denise Spellman (University of New Orleans).

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