Posted Date:November 23, 2010
|Author:||Jana Hernandes, Service Director, Operations, Federal Student Aid|
Subject: Loan Servicing Information - Direct Loan Transfer Initiative Planned for November - December 2010
In June and July of this year, we began assigning new William D. Ford Federal Direct Loan (Direct Loan) Program loans to our five federal loan servicers—Direct Loan Servicing Center (ACS), FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, and Sallie Mae. In doing so, we created some situations in which borrowers have more than one servicer of their Direct Loans and FFEL Purchased Loans, more simply referred to as their federally-owned loans. As promised when we transitioned to a multi-servicer, borrower-centric approach to servicing, we resolve these situations through transfers that ultimately result in one servicer servicing all of a borrower’s federally-owned loans.
At this time, a student or parent borrower may have Direct Loans assigned to the Direct Loan Servicing Center (ACS) and Direct Loans and/or FFEL Purchased Loans assigned to FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, and/or Sallie Mae. We have an initiative underway to begin positioning such a borrower to have one federal loan servicer for all of his or her federally-owned loans. This initiative, which will address approximately one million borrowers who are currently in repayment or in-school status, is beginning this week and will continue through the end of December 2010.
We plan to update our comprehensive posted guidance about servicing federally-owned loans in the near future. For now, we want to inform schools of key information about this Direct Loan transfer initiative. We present the information in question and answer format below.
Q1: Who will be impacted by this Direct Loan transfer initiative?
A1: Through this initiative, a student or parent borrower who has Direct Loans assigned to the Direct Loan Servicing Center (ACS) and Direct Loans and/or FFEL Purchased Loans assigned to one of the four other federal loan servicers will have his or her Direct Loans transferred to the other servicer.
In some cases, this one transfer will result in all of a borrower’s federally-owned loans being serviced by one federal loan servicer. In a very small number of cases, the borrower may still have more than one servicer. When this occurs, we will continue our transfer work until all of the borrower’s federally-owned loans are serviced by one servicer. We plan to restart transfers of this nature in January 2011 and continue every two months on an ongoing basis.
Q2: How will a borrower know if his or her Direct Loans have been transferred?
A2: When we transfer a student or parent borrower’s Direct Loans from the Direct Loan Servicing Center (ACS) to one of the four other federal loan servicers, the new servicer will correspond with the borrower after the transfer occurs. In this correspondence to the borrower, the new servicer will explain that the borrower’s Direct Loans have been transferred and that the servicer will service the loans on our behalf going forward. The correspondence will include both toll-free phone number and Web site information for the servicer.
Q3: How will a school know which federal loan servicer is servicing a borrower’s Direct Loans?
A3: In addition to the student or parent Direct Loan borrower receiving correspondence from the new federal loan servicer, the new servicer will be identified as the servicer of the borrower’s federally-owned loans in the National Student Loan Data System (NSLDS). Both the student or parent borrower and the school will be able to view the federal loan servicer code and name associated with each loan in the NSLDS. In January 2011, we plan to have an automated NSLDS report available that will provide each school with portfolio information by federal loan servicer.
A school will also be able to view the federal loan servicer code and name associated with each Direct Loan via the Common Origination and Disbursement (COD) Web site. The school can access this information under the Person tab on the Web site’s top menu bar by clicking on Servicer and then entering the Award ID or the Social Security Number (SSN). The servicer will be identified under Borrower-Servicer Relationship.
Note: Another option that is currently available for schools to obtain federal loan servicer information is to use the NSLDS Transfer Student Monitoring/Financial Aid History (TSM/FAH) Process. Through the TSM/FAH Process, a school can submit a file of student identifiers to the NSLDS via the Student Aid Internet Gateway (SAIG) and then receive in its SAIG mailbox a response file that contains all loan and grant data in the NSLDS for each identified borrower. The data elements returned in the response file will include the current holders and servicers of each borrower’s loans. As changes occur in a loan’s holder or servicer and are updated in the NSLDS, they would also be reflected in subsequent TSM/FAH response files. In order to use this batch service, schools must sign up via the SAIG Enrollment Web site. For more information about this option, refer to the NSLDS Transfer Student Monitoring/Financial Aid Processes and Batch File Layouts for 2010-2011 and the NSLDS Transfer Student Monitoring/Financial Aid History Processes and Batch File Layouts for 2011-2012 posted on the Information for Financial Aid Professionals (IFAP) Web site.
Q4: How long will it take for the new federal loan servicer information to be reflected in the NSLDS?
A4: The federal loan servicers report loan information to the NSLDS on a weekly basis. As a general rule, when we transfer a student or parent borrower’s Direct Loan from the Direct Loan Servicing Center (ACS) to one of the four other federal loan servicers, the new servicer information should be available in the NSLDS within seven to ten business days after the loan transfer has been completed.
The majority of servicer-to-servicer transfers are completed on schedule. However, in some cases, issues can occur with the data transfer and delay availability of the information in the NSLDS. If a school is concerned about new servicer information for a borrower’s Direct Loan not being available in the NSLDS, it should contact the Federal Student Aid Research and Customer Care Center (RCCC) at 800/433-7327 or firstname.lastname@example.org for assistance.
Q5: Will it be necessary for a borrower to reinitiate actions related to the status of his or her account (for example, reapply for a deferment or forbearance)?
A5: Loan status information will be included when a Direct Loan is transferred from the Direct Loan Servicing Center (ACS) to one of the four other federal loan servicers. The student or parent borrower should experience no break or gap in any status (such as deferment or forbearance) that applies to his or her loan as a result of the transfer. If a borrower is concerned about a break or gap in status, he or she should contact the new servicer for assistance.
We appreciate the community’s ongoing support of our approach to servicing federally-owned loans. If you have questions about Direct Loans transferred through this initiative, contact the new federal loan servicer directly. Contact information for the appropriate servicer can be found on the Loan Servicing Centers for Schools Contact Information page on the IFAP Web site.