| AwardYear: 1998-1999 ChapterNumber: 10 ChapterTitle: Direct Loan Servicing Center PageNumbers: 1-8 Essential Questions * What functions does the Direct Loan Servicing Center perform? * What kinds of communications does the Direct Loan Servicing Center provide to borrowers? * How can my students receive a deferment or forbearance? * How can I contact the Direct Loan Servicing Center? * How can my school comment on the performance of the Direct Loan Servicing Center? General Information Computer Data Systems, Inc., in Utica, New York manages the current Direct Loan Servicing Center (Loan Servicing Center). Loan Servicing Center Activities Once loans are booked, the Department of Educations Direct Loan Servicing Center assumes responsibility for servicing and collection activities. These activities, similar to those that lenders perform in the Federal Family Education Loan (FFEL) Program, include: * Contacting students after initial loan disbursement with additional loan program information * Applying and capitalizing accrued interest, applying fees, and maintaining borrower account balances * Recording all payments received daily and applying payments to borrowers accounts * Tracking and researching unapplied payments * Tracking loans through in-school and grace periods and converting loans to repayment status * Processing deferment and forbearance requests * Reporting loan information to the National Student Loan Data System and the Departments Central Database * Collecting and analyzing all information required to support borrowers requests for loan repayment plans * Performing comprehensive loan collection activities, including billing, letter writing, telephoning, skip tracing, and borrower tracking activities * Repaying the collected loan proceeds to the Department of Treasury * Maintaining audit trails * Providing required accounting support * Answering inquiries from the Department and participating schools * Providing for standard and ad hoc reporting needs * Interfacing with other systems, as required. Many schools are familiar with these operations under the current FFEL Program. However, several activities are worthy of special discussion because they apply directly to borrowers and schools. Borrower Service Features The school is the borrowers primary contact up to the time Direct Loan funds are disbursed. At that point, the Loan Servicing Center notifies the borrower of the booked loan and begins a relationship that will continue until the borrower fully repays the loan. The Loan Servicing Centers first communication with the borrower occurs after the loan has been booked. Additional communication occurs throughout the repayment period. The Loan Servicing Center also provides the borrower with contacts and telephone numbers in case he or she has questions about the loan or its provisions. Addresses and Toll-Free Number The borrower can locate the address and toll-free telephone numbers of the Loan Servicing Center on all correspondence he or she receives from the Loan Servicing Center. The general correspondence and Direct Loan Payment Center addresses and toll-free telephone numbers for borrower inquiries are listed below: Direct Loan Servicing Center Utica Correspondence Address: Direct Loan Payment Center Address: U.S. Department of Education Direct Loan Servicing Center Borrower Services Department P.O. Box 746000 Direct Loan Servicing Center Atlanta, GA 30374-6000 P.O. Box 4609 Utica, NY 13504-4609 Telephone Numbers for Borrower Inquiries: 1-800-848-0979 TDD: 1-800-848-0983 FAX: 1-800-848-0984 Delinquent Account/Collections Department: 1-800-848-0981 Hours of Operation are 8:00 am 8:00 pm EST. Standard Communications Most of the Loan Servicing Centers communication with borrowers will fall into one of the following categories: * Loan disbursement notifications * Deferment and forbearance assistance * Account servicing documents (monthly billings, quarterly statements, coupon books, and annual statements). Loan Issuance Notification Through the loan disbursement record, the school notifies the Loan Origination Center of each loan disbursement made to a borrower. Within 10 business days of receiving this record, the Loan Servicing Center will contact the borrower at his or her permanent address. The communication to the borrower will include: * A redisclosure of the loan amount, the amount disbursed to date, and the loans terms * The name of the office to contact if the borrower did not receive the loan proceeds or if the borrower has questions. Deferment and Forbearance Assistance During the repayment period, a borrower may request a deferment or a forbearance. A deferment is a period of time during which repayment of the loan principal is temporarily postponed. If the loan is a Direct Subsidized Loan or Direct Subsidized Consolidation Loan, there will be no interest charged to the borrower while the loan is in deferment. During deferment, interest is charged on all other Direct Loans. A forbearance is an arrangement to postpone or reduce a borrowers payment amount for a limited and specified period. During forbearance, interest is charged on all Direct Loans. When interest is charged during deferment and forbearance periods, the borrower can choose to pay the interest during the forbearance period or have it capitalized (i.e., added to the principal balance) at the end of the period. The Loan Servicing Center will notify borrowers of deferment and forbearance options during delinquent loan collection. The notification will describe the borrowers options and provide a telephone number and address for further assistance. * A borrower may request deferment or forbearance forms by telephone from the Loan Servicing Center. The Loan Servicing Center tracks all deferment and forbearance requests from a borrower. The Loan Servicing Center completes the borrower-specific information at the top of the forms and sends them to a borrower within three business days of receiving the request. * A school may choose to keep a supply of deferment and forbearance forms in its Financial Aid Office. If a borrower obtains these forms from the school, the borrower must complete the borrower-specific information at the top of the forms in addition to other information requested on the forms. Forms are also on the Direct Loan web site. * The Loan Servicing Center reviews deferment and forbearance forms for completeness and accuracy and may contact a borrower for any additional information needed to complete the forms. * Borrowers must provide the Loan Servicing Center with all information and documents necessary to establish eligibility for a specific type of deferment or forbearance. The Loan Servicing Center acts on all deferment and forbearance requests within 10 business days of obtaining all necessary information. * The Loan Servicing Center will negotiate deferments and forbearances to meet the needs of the borrower while maintaining compliance with the law and regulations. Deferments Direct Loan borrowers are entitled to the same deferments as FFEL Program borrowers who had no outstanding balance as of July 1, 1993. In addition, Direct Loan borrowers who have an outstanding balance on a FFEL Program loan (made before July 1, 1993) at the same time they obtain a Direct Loan are eligible for all the pre-July 1, 1993, FFEL deferments. The Direct Loans entrance and exit counseling materials list these additional deferments (see Chapter 4). All Direct Loan borrowers qualify for deferment when the borrower is * Enrolled at least half-time at an eligible school * Pursuing a course of study under an eligible graduate fellowship program * Pursuing a rehabilitation training program for disabled individuals * Conscientiously seeking, but unable to find, full-time employment (not to exceed three years) * Experiencing, or will experience, economic hardship (not to exceed three years). Forbearance A forbearance is available when the borrower is willing but unable to make scheduled payments. Forbearance can take the form of several options: the borrower either makes no payments, or makes smaller payments than originally scheduled. Forbearance is also available if the borrower * Is unable to make scheduled payments due to poor health, temporary financial hardship, or other acceptable reasons * Serves in a medical or dental internship or residency program * Serves in a position under the National and Community Service Trust Act of 1993 * Has a monthly debt burden for all federal Title IV student loans that equals or exceeds 20 percent of his or her total monthly gross income (not to exceed three years). Account Servicing Statements The Loan Servicing center mails a variety of statements to each borrower to keep him or her updated on the status of the loan. Quarterly Interest Statements During the in-school, grace, deferment, and forbearance periods, quarterly interest statements are mailed to all unsubsidized loan borrowers. The statements list the interest paid during the last quarter, the interest accrued during the last quarter, and the outstanding principal balance. Borrowers are informed that they may pay or not pay the interest that has accrued. Any unpaid accrued interest will be capitalized (added to the principal balance at the end of the period. Annual Statements Annual statements are mailed to all borrowers within the first 60 days of every calendar year. The annual statement provides some of the following specific information to Direct Loan borrowers: Activity for the Year * Opening Balance * Payments/adjustments * New Loans/Interest/Charges * Capitalized Interest * Ending Balance * School Adjustments Cumulative Loan Information * Total Amount of Loans * Adjusted Loan Amount * Total Principal Paid * Total Interest Paid * Total School Adjustments * Total Capitalized Interest * Total Principal Balance * Total Charges Paid Billing Statements Borrowers who are not using Electronic Debit Account (EDA) or coupon books to make their monthly payments are mailed billing statements monthly. Each billing statement provides the current outstanding principal balance, current amount due, and any past due amounts. School Services The Loan Servicing Center maintains a toll free telephone number to support schools: * Direct Loan Servicing CenterUtica School Services 1-800-877-7658 Hours of Operation are 8:00 am 8:00 pm EST. A complete list of toll-free telephone numbers for the Loan Servicing Center is included in Appendix W. The Loan Servicing Center also provides exit counseling support to schools. See Chapter 4 for more information on exit counseling support. Problem Resolution If schools or borrowers have a complaint related to either the Direct loan Servicing Center or the Loan Origination Center, they should contact the School Relations (schools) or Borrower Services (borrowers) unit at the appropriate site. If further action is necessary, the school or borrower should contact the Regional Direct Loan Account Management Staff in their region. The Account Management Staff will research questions and complaints, follow up if necessary, and attempt to come to a resolution. The telephone numbers of the Regional Account Managers are listed in Appendix W. When the Department of Education receives a complaint about any servicers (Servicing or Loan Origination), a copy of the complaint will be sent to the appropriate center. Complaints concerning collection activity at the Loan Servicing Center will be handled as follows: * If the complaint alleges a violation of state or federal law, the Loan Servicing Center will temporarily cease collection activity on the account in question. * If the complaint is received by the Loan Servicing Center directly from the borrower, the Loan Servicing Center will notify the Department of Education of the complaint (usually within three days). * Collection activity on the account will not be resumed until the Department of Education or the Loan Servicing Center has approved resolution of the complaint. |