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Update #7: Direct Consolidation Loan

PublicationDate: 11/14/97
Summary: Update #7: Direct Consolidation Loan
Author: ODAS - Office of the Deputy Assistant Secretary - SFA

Consolidation Update Seven

November 14, 1997

Dear Colleague:

I am pleased to provide additional information about our progress in
processing Direct Loan consolidation applications.

First, however, I would like to respond to your questions about
borrowers who are deactivated at some stage in the Direct Loan
consolidation application process who contact us later to indicate that
they wish to reactivate their applications. When the Direct Loan
consolidation contractor deactivates a borrower's application --
usually because we have not received information from a borrower
or because the borrower has not signed and returned a promissory
note--we notify that borrower that he or she may reactivate the
application at any time simply by supplying the information or
returning the promissory note.

When we then receive the request from a borrower, we reactivate the
application at the same processing stage at which it was deactivated.
Except for applications that have been inactive for so long that
financial data may no longer be correct, we do not require borrowers
to repeat any steps that already have been completed. Please note that
this reactivation process also is explained in the other
correspondence that we send to borrowers who have applied for
Direct Loan consolidation.

I am pleased to report that as of November 10, more than 7900
borrowers have reactivated their applications and that we have
funded and booked 4,123 of these.

We are also working very hard to improve our communications with
borrowers so that more of them will complete all the steps necessary
for Direct Loan consolidation. While it is not easy to benchmark
industry standards in the financial services industry, we do have
information that suggests that the percentage of applicants who have
completed the DL consolidation process is within the range for some
sectors of the lending community

Please see the data below for the current status of application at our
Direct Loan Consolidation Center:

Status: As of 10/27/97 As of 11/12/97

I. Applications Consolidated
(completed): 84,975 92,722

Withdrawn/Deactivated 40,600 39,384

Current Applications
in Process 17,281 10,750

II. Breakdown of Current Applications:

Applications in Pre-Certification
Review stage (incomplete application) 0 0

Applications in Certification of
Loan Amounts Stage (awaiting
loan holder information): 760 248

Applications in Promissory
Note Review 492 57

Applications in Promissory
Note Stage 14,294 6,606

Respectfully submitted,

Elizabeth M. Hicks
Deputy Assistant Secretary
Student Financial Assistance Programs

Last Modified: 08/16/1999