Posted Date:September 10, 2015
| Author: | John Brooks, Acting Service Director, Operations, Federal Student Aid |
Subject: Loan Servicing Information - Performance Results and First Period 2015-2016 Allocation Information
Note: In November 2015, we moved this announcement's attachments to the FSA Data Center. The attachments for the Quarter Ending 6/30/2015 are now located on the Servicer Performance Metrics and Allocations page at https://studentaid.ed.gov/sa/about/data-center/business-info/contracts/loan-servicing/servicer-performance#06302015.
Per the contractual agreement with each of our federal loan servicers, the Department of Education (the Department) will semi-annually measure servicer performance in the areas of customer satisfaction and default prevention. We will then use these results to determine each servicer’s allocation of future loan volume twice each year.
This announcement is intended to share the performance results and allocation information with the financial aid community. The results and allocations discussed in the announcement reflect performance metrics that became effective on September 1, 2014 for servicers under the Title IV Additional Servicer (TIVAS) contracts and on October 1, 2014 for servicers under the Not-for Profit (NFP) servicing contracts.
In determining the allocations for the First Period of 2015-2016 (September 1, 2015 – February 29, 2016), the Department measured customer satisfaction with each member of the federal loan servicer team exclusively through independently administered customer satisfaction surveys conducted through June 2015. We assessed default prevention through analysis of each servicer’s portfolio. We determined allocations in accordance with contractual agreements.
The federal loan servicers under the TIVAS contracts with Fourth Quarter performance results, Sixth Year performance results, and First Period 2015-2016 allocations are as follows:FedLoan Servicing (PHEAA)
Great Lakes Educational Loan Services, Inc.
Navient
Nelnet
The servicers under NFP contracts with Fourth Quarter performance results, Second Year performance results, and First Period 2015-2016 allocations are as follows:
CornerStone
ESA/Edfinancial
Granite State – GSMR
MOHELA
OSLA
VSAC Federal Loans
Note: We provide Fourth Quarter performance results for Aspire Resources Inc. (Aspire); however, we do not provide allocation information for this NFP servicer. As explained in a July 22, 2015 Electronic Announcement, Aspire requested to cease operations as a member of the federal loan servicer team. Accordingly, the servicer was not included in the final calculation of the First Period 2015-2016 allocations and will not be included in allocation calculations going forward.
For First Period 2015-2016 allocations, the servicers under TIVAS contracts and the servicers under NFP contracts will be set at 74 percent and 26 percent of new borrower accounts, respectively. This is a slight change from the previous distribution of 75 percent for TIVAS servicers and 25 percent for NFP servicers. The decision to effectively maintain the previous distribution is based on a number of factors:
The Department is in the planning phase of a new student loan servicing acquisition; this effort will streamline and simplify servicing systems and processes to improve customer service, increase efficiency, and enhance the Department’s ability to effectively oversee and monitor servicing operations. As this effort will likely result in significant changes to the current servicing environment, we believe it is prudent to maintain the existing distribution of accounts among federal loan servicers until the post-acquisition transition plan is fully developed.
The updated allocation volumes will continue to increase every servicer’s overall volume and will continue to increase the portion of the overall Department portfolio serviced by NFPs. At the same time, it ensures that the pace of growth is measured to minimize risk to borrowers.
For smaller servicers under NFP contracts, portfolio increases will be quite dramatic. For example, servicers with a current portfolio of approximately 100,000 will each receive about 50,000 new accounts over the allocation period. The increase in accounts is equal to half the size of their current portfolios.
We provide the performance results and allocation information in four attachments to this announcement.
In the attachment titled “Explanation of Allocation and Performance Measure Methodology,” we provide an explanation of the overall performance measure methodology.
In the attachment titled “Quarterly Performance Results for FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Navient, and Nelnet – Quarter Ending June 30, 2015,” we provide the Fourth Quarter customer satisfaction and default prevention results for these four servicers.
In the attachment titled “Quarterly Performance Results for Not-For-Profit (NFP) Members of Federal Loan Servicer Team – Quarter Ending June 30, 2015,” we provide the Fourth Quarter customer satisfaction and default prevention results for Aspire Resources Inc., CornerStone, ESA/Edfinancial, Granite State – GSMR, MOHELA, OSLA, and VSAC Federal Loans.
In the attachment titled “Final Calculation for First 2015-2016 Allocation Period FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Navient, and Nelnet,” we provide the customer satisfaction and default prevention results for these four servicers and the allocation each servicer will receive in the first period of the seventh year.
In the attachment titled “Final Calculation for First 2015-2016 Allocation Period for Not-For-Profit (NFP) Members of Federal Loan Servicer Team,” we provide the customer satisfaction and default prevention results for these six servicers and the allocation each servicer will receive in the first period of the third year.
We value the participation of all customers in the loan servicing process and thank you for your ongoing feedback.