Posted Date:March 2, 2016
|Author:||John Brooks, Acting Service Director, Operations, Federal Student Aid|
Subject: Loan Servicing Information - First Period 2015-2016 Performance Metrics and Second Period 2015-2016 Allocation Information
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 addition, the Consolidated Appropriations Act of 2016 included the following provision related to the allocation of new student borrower accounts to federal loan servicers:
Provided, that the Secretary shall, no later than March 1, 2016, allocate new student loan borrower accounts to eligible student loan servicers on the basis of their performance compared to all loan servicers utilizing established common metrics, and on the basis of the capacity of each servicer to process new and existing accounts.
Given this new requirement, beginning on March 1, 2016, new allocation percentages will be based on performance under the established common metrics compared across all loan servicers. As part of our assessment of how best to implement this new provision, we have requested, received, and conducted an initial review of capacity plans from all of our servicers to assess the reasonability and risk of each servicer’s staffing, training, system, and other resource planning. We have experience working with each of our servicers and are already familiar with their systems and capabilities. Based on our experience and our initial assessment of the capacity plans, we are confident that all of our servicers can manage and process projected borrower account allocations for the next few months, while the volume of new accounts is relatively low. While we continue the process of completing and documenting our capacity assessment, we will monitor each servicer’s performance closely and can modify or discontinue allocations on short notice if any issues arise.
Because we believe that the significant variation in the composition of the loan portfolios between the Title IV Additional Servicer (TIVAS) and Not-For-Profit (NFP) servicers prevents an optimal comparison of their performance using the existing contractually established common metrics which govern loan allocation, we plan to develop new common metrics to take effect no later than July 1, 2016. Those metrics will account for variations in the loan portfolios of TIVAS servicers and the loan portfolios of NFP servicers. We were unable to do this by March 1 because the time between the law’s passage and March 1 did not provide adequate time to develop and establish by contract modification new common metrics that would control for variation in loan portfolios. As stated above, we will carefully monitor servicer performance until new metrics are in place and can quickly adjust or discontinue allocations if performance issues arise.
In determining the allocations for the Second Period of 2015-2016 (March 1, 2016 – June 30, 2016), the Department measured customer satisfaction with each member of the federal loan servicer team exclusively through independently administered customer satisfaction surveys conducted between July and December 2015. We assessed default prevention through analysis of each servicer’s portfolio. As noted above, we determined allocations in accordance with contractual agreements and the requirements of the Consolidated Appropriations Act.
The federal loan servicers with customer service performance results for the Quarter Ending September 30, 2015, customer performance results for the Quarter Ending December 31, 2015, and Second Period 2015-2016 allocations are as follows:
FedLoan Servicing (PHEAA)
Granite State – GSMR
Great Lakes Educational Loan Services, Inc.
HESC/Edfinancial (Formerly ESA/Edfinancial; we are updating our systems.)
VSAC Federal Loans
All federal loan servicer performance metric and allocation data is now located on the FSA Data Center. This includes the customer performance results for the Quarter Ending September 30, 2015, customer performance results for the Quarter Ending December 31, 2015, and allocations for the Second Period 2015-2016.
The results for the Quarter Ending September 30, 2015 are available at https://studentaid.ed.gov/sa/about/data-center/business-info/contracts/loan-servicing/servicer-performance#09302015.
The results for the Quarter Ending December 31, 2015 and the allocations for the Second Period 2015-2016 are available at https://studentaid.ed.gov/sa/about/data-center/business-info/contracts/loan-servicing/servicer-performance#12312015.
Prior metric and allocation data are available by selection from a dropdown menu located at https://studentaid.ed.gov/sa/about/data-center/business-info/contracts/loan-servicing/servicer-performance.
We value the participation of all customers in the loan servicing process and thank you for your ongoing feedback.