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Consolidation Update #9

PublicationDate: 1/20/98
Summary: Consolidation Update #9
Author: ODAS - Office of the Deputy Assistant Secretary - SFA


Consolidation Update #9

January 20, 1998

Dear Colleague:

With the start of the new year, I am pleased to update you on the status of the William
D. Ford Direct Loan Consolidation program.

This fall, the Department, our direct loan contractor, Electronic Data Systems (EDS),
and Price Waterhouse have collaborated to re-design and improve the direct loan
consolidation process. The most important improvements made to the EDS loan
consolidation process include a re-engineered loan certification process, improved
data accuracy and managerial controls, and new staff and added expertise.

As planned, EDS resumed processing new applications for direct loan consolidation on
December 1, 1997, and has already accepted roughly 11,600 applications and
completed more than 2,400 consolidations. It also has mailed over 46,000
applications to individuals who expressed an interest in a direct loan consolidation
during and since the suspension.

Below is an activity report summarizing EDS's progress in processing the applications
it has accepted since December 1.

Post-December 1 Applications As of 01/16/98
Applications Accepted 11,593
Applications in Process 9,086
Obtaining lender certification 7,588
In promissory note review 787
Awaiting signed promissory note from borrower 426
In income-contigent repayment process 285
Applications Withdrawn/Deactivated 74
Applications Consolidated 2,433

I would also like to update you on EDS's work on the roughly 84,000 loan
consolidation applications pending at the beginning of September. EDS has now
resolved 96 percent of those applications, met the performance criteria specified as
preconditions for re-opening the program, and completed roughly 42,000
consolidations in ten weeks -- far more than is typical of any other student lender,
including Sallie Mae before it suspended its loan consolidation program.

Of the more than 3,700 applications in process, all but 208 are formerly deactivated
applications that have recently been reactivated at the request of the borrower. These
208 applications are all pending either a returned promissory note or approval of
income contingent repayment (a process which requires information from the Internal
Revenue Service).

Below is an activity report summarizing EDS's progress in processing the
pre-December 1, 1997 backlog of applications since the last Loan Consolidation
Update.

Pre-December 1 Applications As of 11/17/97 As of 1/16/98
Applications Accepted 142,856 142,856
Applications in Process 8,775 3,764
1. Incomplete Applications 0 0
2. Obtaining lender certification 135 0
3. In promissory note review 43 0
4. Awaiting signed promissory
note from borrowers 4,781 208
Applications
Withdrawn/Deactivated 39,821 39,881
Applications
Consolidated (completed) 94,260 99,211

This will be the last update on the resolution of the pre-December inventory of direct
loan consolidation applications.

Thank you for your patience and I look forward to sharing more news of our progress
in improving the Direct Loan consolidation program with you over the coming months.

Respectfully submitted,

Diane Rogers
Acting Deputy Assistant Secretary
Student Financial Assistance Programs

Last Modified: 08/16/1999