Posted Date:December 7, 2011
|Author:||Jana Hernandes, Service Director, Operations, Federal Student Aid|
Subject: Loan Servicing Information - Federally-Owned Loan Transfer Initiatives Planned for December 2011
We continue our efforts related to borrowers who have more than one servicer of their William D. Ford Federal Direct Loan (Direct Loan) Program loans and Federal Family Education Loan (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.
Based on experience gained through each transfer initiative, we continuously refine and improve the transfer process. Our goal is to execute each transfer in a manner that is as orderly and smooth as possible for the affected borrowers. During December 2011, we plan to implement the next two transfer initiatives. These initiatives are as follows:
Direct Loans and FFEL Purchased Loans With Multiple Servicers – This initiative will address borrowers who have federally-owned loans assigned to FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, and Sallie Mae. We will transfer the loans, which are currently assigned to two or more of these federal loan servicers, to one of the servicers. The transfers are scheduled to begin on or about December 7, 2011.
Rehabilitated/Reinstated Loans with Department of Education Student Loan Servicing Center (ACS) – This initiative will address borrowers who have federally-owned loans that were rehabilitated after the borrower defaulted or reinstated after the borrower no longer met the conditions for total and permanent disability discharge. These borrowers’ loans were not transferred when we completed earlier phases of this initiative in April and September 2011. We will transfer the loans, which are currently assigned to the Department of Education Student Loan Servicing Center (ACS), to Great Lakes Educational Loan Services, Inc. The transfers are scheduled to occur on December 16, 2011.
Note: We determine the servicer to which a borrower’s loans will be transferred based on the number of loans each servicer currently services for the borrower or, if the number of loans is equal across servicers, the total dollar amount of the loans. The borrower’s loans are transferred to the servicer that currently services the most loans or the highest total dollar amount.
Note: Federally-owned rehabilitated and reinstated loans include FFEL Program loans that were assigned to (rather than purchased by) the Department of Education, as well as Direct Loans and FFEL Purchased Loans.
We present other key information about the two upcoming transfer initiatives in question and answer format below.
Q1: How will a borrower know if his or her federally-owned loans have been transferred?
A1: When we transfer a student or parent borrower’s federally-owned loans from one servicer to another, the new servicer will correspond with the borrower after the transferred loans have been fully loaded to the new servicer’s system. In this correspondence to the borrower, the new servicer will explain that the borrower’s federally-owned 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 new servicer.
Q2: How will a school know which federal loan servicer is servicing a borrower’s federally-owned loans?
A2: In addition to the student or parent 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). The new servicer reports this information to the NSLDS after the transferred loans have been fully loaded to the new servicer’s system. Both the borrower and the school will be able to view the federal loan servicer code and name associated with each loan via the NSLDS Student Access Web site and the NSLDS Professional Access Web site, respectively.
In addition to individual Web lookups, the School Portfolio Report (SCHPR1) is available to schools by request under the Report Tab on the NSLDS Professional Access Web site. This report provides a school with information about all Direct Loan and/or FFEL program loans associated with its school code. It includes loans that are serviced by all servicers, including our federal loan servicers, and provides identifying information about the servicer for each loan. The report is delivered to the school’s Student Aid Internet Gateway (SAIG) mailbox. For complete information about this report, refer to NSLDS Newsletter 29 and NSLDS Newsletter 35 on the Information for Financial Aid Professionals (IFAP) Web site.
Q3: How long will it take for the new federal loan servicer information to be reflected in the NSLDS?
A3: 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 federally-owned loans from one federal loan servicer to another, the new servicer information should be available in the NSLDS within seven to ten business days after the transferred loans have been fully loaded to the new servicer’s system and the new servicer corresponds with the borrower.
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 federally-owned 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.
Q4: Will it be necessary for a borrower to reinitiate actions related to the current status of his or her account (for example, reapply for a deferment or forbearance)?
A4: Loan status information will be included when we transfer a student or parent borrower’s federally-owned loans from one federal loan servicer to another. The borrower should experience no break or gap in any current status (such as deferment or forbearance) that applies to his or her federally-owned loans as a result of the transfer. If a borrower is concerned about a break or gap in current status, he or she should contact the new servicer for assistance.
Q5: Will it be necessary for a borrower to reinitiate services related to his or her account (for example, account access via the Web, electronic correspondence, and automatic debit or Web payments,)?
A5: When we transfer a student or parent borrower’s federally-owned loans from one servicer to another, it will be necessary for the borrower to contact the new servicer to reinitiate some services related to the borrower’s account. After the transferred loans have been fully loaded to the new servicer’s system, the new servicer will provide correspondence to the borrower that explains how the borrower establishes account access via the Web and signs up for other services (such as Web payments and electronic correspondence). It will not be necessary for a borrower who has been on automatic debit with one servicer to reinitiate the service with the new servicer. If a borrower has questions about reinitiating account services, 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 federally-owned loans transferred through these initiatives, 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.