Transcript Document

Student Lending Analytics
Direct Lending Transition Process
May 19, 2010
© Student Lending Analytics, LLC
Slide 1
Flash Survey: Direct Lending Transition Process
Background
Situation: With the July 1st deadline to implement DL looming, this
survey seeks to garner feedback from the financial aid community to
assess the progress they are making towards the deadline as well
as providing feedback to continue to improve the process
Survey Goals
– Assess the level of satisfaction of schools transitioning to Direct Lending
– Identify ideas to improve the process
– Determine the degree to which schools are requesting technical assistance
and their satisfaction with the process
– Identify key resources that schools have identified to assist them in the
implementation process
– Assess the degree of confidence that schools have in implementing the
process on time
© Student Lending Analytics, LLC
Slide 2
Flash Survey: Direct Lending Transition Process
Methodology
Emailed flash survey on May 14th with due date of May 17th 2010
In addition to demographic questions, the survey asked respondents
the following questions:
– Describe your overall level of satisfaction with the implementation process
to date.
– Have you requested additional resources from your "point of contact" or
other Dept. of Education representative to assist you in the implementation
process?
• What resources did you request to assist your institution in
implementing Direct Lending (please be as specific as possible)?
• Was your request granted?
• How quickly were you able to get a response on whether your request
for additional resources would be granted?
– CHECK ALL THAT APPLY. My institution (either myself or other staff
members) has already taken the following steps to prepare for Direct
Lending:
© Student Lending Analytics, LLC
Slide 3
Flash Survey: Direct Lending Transition Process
Methodology
Questions asked (continued):
– What single resource has been most helpful to you and your team?
– Describe your level of confidence that the factors described below will be
ready by the July 1st deadline:
• Financial aid management systems ability to process Direct Loans
• Student and parent understanding of process changes
• Readiness of other departments on campus (business office, grants,
etc.)
– Please describe any other factors that would hinder your institution's ability
to implement the Direct Loan program by July 1st.
© Student Lending Analytics, LLC
Slide 4
Flash Survey: Direct Lending Transition Process
Methodology (Cont.)
Responses were normalized for following reasons:
– Email addresses that did not correspond with an educational institution were
excluded
– Several schools provided multiple responses; only one response was
analyzed
– Responses that included demographic data but incomplete answers to main
survey questions were excluded
Overall, there were 212 survey responses analyzed
– The question that asked the respondents to indicate their level of
confidence in processing a Direct Loan and other issues was redesigned in
the middle of the survey so only 62 responses were included in the results
© Student Lending Analytics, LLC
Slide 5
Flash Survey: Direct Lending Transition Process
Summary
Overall, 83% of respondents rated their level of satisfaction as
“Acceptable” or higher when it came to their direct lending
implementation process to date.
Among the most popular financial aid management systems
(FAMS), respondents were least satisfied with PowerFAIDS with
67% of respondents rating their satisfaction as “Acceptable” or
higher while Banner (91%) and DataTel (90%) were most highly
rated.
– Home-grown systems also showed low levels of satisfaction (69%)
Graduate programs had the lowest level of satisfaction with only
50% rating their implementation experience as “Acceptable” or
higher.
Over 1/3 (35%) of participants have requested additional technical
resources to assist in their implementation
– While six out of seven requests have been granted, 30% of requests have
not received an answer yet
© Student Lending Analytics, LLC
Slide 6
Flash Survey: Direct Lending Transition Process
Summary
In terms of confidence level, survey participants were:
– Most confident that they would be able to process Direct Loans by July 1st
with 89% being very confident (50%) or confident (39%) that they would
accomplish by this deadline
– Least confident that parents and student borrowers would understand the
process changes with only 21% being “very confident” and 58% being
“somewhat confident” that they could navigate the shift to Direct Lending
Over 80% of schools have completed these steps to prepare for
Direct Lending, while only 16% have hired a consultant
– Participated in DL webinars
– Reviewed Department of Education’s Direct Lending website
– Developed communication strategy for parents and student borrowers
The three most valuable resources for survey participants were
peer/mentoring relationships, Dept. of Education (website, webinars
and point of contact) and software vendors
© Student Lending Analytics, LLC
Slide 7
Flash Survey: Direct Lending Transition Process
Profile of Survey Participants
School Type
School Ownership
50%
40%
30%
20%
10%
0%
60%
50%
40%
30%
20%
10%
0%
4-Year Private 4-Year Public 2-Year Public
Other
Private
Public
Other
Cost of Attendance
© Student Lending Analytics, LLC
0
O
ve
r
$4
0,0
0
00
01
-$
40
,0
00
$3
0 ,0
$2
0 ,0
01
-$
30
,0
00
-$
20
,0
$1
5 ,0
01
-$
15
,0
01
$1
0 ,0
Un
de
r
$1
0,0
0
00
0
30%
20%
10%
0%
Slide 8
SLA Flash Survey: Direct Lending Transition Process
Overall Level of Satisfaction
40%
Percentage of Total Respondents
36%
31%
30%
20%
16%
10%
10%
6%
0%
Very Satisfied
Satisfied
Acceptable
Unsatisfied
Very Unsatisfied
Survey question: Describe your overall level of satisfaction with the implementation process to date.
Source: SLA Flash Survey: Direct Lending Transition Process, May 2010
© Student Lending Analytics, LLC
Slide 9
SLA Flash Survey: Direct Lending Transition Process
Level of Satisfaction (By FAMS System)
100%
91%
90%
Percentage of Total Respondents
90%
86%
84%
80%
69%
67%
70%
60%
50%
40%
30%
20%
10%
0%
Banner
Sample size:
53
DataTel
51
Jenzibar
7
PeopleSoft
Home-Grown PowerFAIDS
25
13
45
Note: Percentage of respondents indicating level of satisfaction as “Acceptable”, “Satisfied” or “Very Satisfied”
Source: SLA Flash Survey: Direct Lending Transition Process, May 2010
© Student Lending Analytics, LLC
Slide 10
SLA Flash Survey: Direct Lending Transition Process
Level of Satisfaction (By School Type)
100%
90%
Percentage of Total Respondents
90%
88%
81%
80%
70%
60%
50%
50%
40%
30%
20%
10%
0%
4-year public
Sample size:
51
2-year public college
40
4-year private, nonprofit
99
Graduate program
16
Note: Percentage of respondents indicating level of satisfaction as “Acceptable”, “Satisfied” or “Very Satisfied”
Source: SLA Flash Survey: Direct Lending Transition Process, May 2010
© Student Lending Analytics, LLC
Slide 11
SLA Flash Survey: Direct Lending Transition Process
Ideas For Improvement
Reporting issues
– “It is difficult to tell who has completed MPN and Entrance Counseling
requirements”
Webinar recommendations
– “Better detailed instructions versus so many webinars”
– “It would have been helpful to learn a process: for example, how to
originate a loan with step by step instructions”
– “The trainings should be recorded and on-demand”
Websites
– “More up to date information on various DL web sites”
– “…One click links to apply for MPN for the student, student friendly
messages on the loan sites.”
© Student Lending Analytics, LLC
Slide 12
SLA Flash Survey: Direct Lending Transition Process
Ideas For Improvement
Software issues
– We ran into a lot of technical issues while trying to set up ED Express and
the various counseling reports. (Regent FAM user)
– It would be nice to have step by step instructions on how to do the process
through EdExpress.
– Apart from software vendor not being up to date with the new schema for
XML yet, it would be nice if the search functions within COD worked.
(PowerFAIDS client)
– We have a home grown system and the implementation is very time
consuming and burdensome.
– The unsatisfaction mainly pertains to SunGard, the Banner software
company. They didn't seem to have "done their homework" before rolling
out their system upgrades for the 10-11 school year.
– The Department of education needs to understand that all schools do not
have a canned system. They need to have a team to evaluate the needs of
non-traditional solutions. (Home Grown user)
© Student Lending Analytics, LLC
Slide 13
SLA Flash Survey: Direct Lending Transition Process
Ideas For Improvement
PLUS Loans
– Federal Direct PLUS Loans have been a sore spot with a slow rollout of the
studentloans.gov PLUS Loan function.
– Improve Plus application to include loan period, request for endorser with
application, and of who receives the refund.
“Point of Contact issues
– When assigned a COD "point of contact", we'd like to be represented; he's
difficult to contact and provides few answers to our questions.
– I haven't yet been contacted by a rep. I'm unsure whether to contact ED,
COD or regional office for guidance.
– My on-boarding person was not very responsive to my phone call messages
Reconciliation process
– Assistance for schools with the reconciliation process and software that
helps identify differences between COD and the school.
© Student Lending Analytics, LLC
Slide 14
SLA Flash Survey: Direct Lending Transition Process
Ideas For Improvement
Understanding of student experience
– “It would be helpful it DOE had tutorials we could watch that would show us
what students see when the log into studentloans.gov. and go through the
steps of completing the entrance and MPN.”
Testing issues
– “DOE should make sure there are enough employees available to test
send/receive files. We continue to wait on the progression of files sent to
DOE while DOE employees are in training per our coordinator with Direct
Lending.”
– “Being able to take a test record "completely" through the entire process.
Currently, we're able to test up to a certain point, but not completely through
a simulation of disbursement.”
– “Very poor follow-up from COD regarding test files sent. Due to time
limitations, and their lack of call backs and follow-up, we were unable to test
with test data but instead must test with live data.”
© Student Lending Analytics, LLC
Slide 15
SLA Flash Survey: Direct Lending Transition Process
Need for Technical Resources
35% of schools have requested technical resources from their
“point of contact.”
– 60% had their request granted, while 30% are still awaiting an answer
– Most requests were technical questions and not staffing related
A sampling of school requests for technical assistance include:
–
–
–
–
–
–
–
–
–
G5 set-up process
Testing
Encryption software
Information on non-functional PLUS applications
Banner training consultant
Retrieving credit approval report for PLUS Loans
Consultation with other like schools with home-grown information systems
Assistance with effective way to implement EDConnect via a server
Consultants
© Student Lending Analytics, LLC
Slide 16
SLA Flash Survey: Direct Lending Transition Process
Need for Technical Resources
Several requests for additional staffing resources were either
awaiting a response or turned down:
– “3rd party transition service assistance”
– “Specific assistance for implementation”
– “We have requested a temporary staff member to assist over the summer.
Our rep from DL is not very responsive and seems rather annoyed when we
ask questions.”
– Turned down request for: “Operational funding, dedicated systems set-up
representative”
© Student Lending Analytics, LLC
Slide 17
SLA Flash Survey: Direct Lending Transition Process
Turnaround Times For Resource Requests
Percentage of Total Respondents
30%
28%
20%
20%
15%
12%
8%
10%
10%
7%
0%
2-3 business 4-5 business
One
Same
days
days
business day business day
Between 6
and 10
business
days
More than
10 business
days
Have not
received an
answer yet
Survey question: How quickly were you able to get a response on whether your request for additional resources would be granted?
Source: SLA Flash Survey: Direct Lending Transition Process, May 2010
© Student Lending Analytics, LLC
Slide 18
SLA Flash Survey: Direct Lending Transition Process
Steps Taken To Prepare For Direct Lending
94%
DL Webinars
89%
ED Website
82%
Communications Strategy
63%
Built Internal Team
Software Vendor
61%
FSA Conference
61%
54%
DL Regl. Meetings
48%
Peer Schools
16%
Consultant
0.0%
10.0%
20.0%
Percentage of Respondents
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0% 100.0%
Survey question: CHECK ALL THAT APPLY. My institution (either myself or other staff members) has already taken the following steps to
prepare for Direct Lending:
Source: SLA Flash Survey: Direct Lending Transition Process, May 2010
© Student Lending Analytics, LLC
Slide 19
SLA Flash Survey: Direct Lending Transition Process
Three Most Helpful Resources
Peers
–
–
–
–
“Peers who have already transitioned to DL”
“Peer School visit to see how the process actually runs within an office.”
“Other schools sharing their process and experiences has been very helpful.”
“Utilizing the National Direct Student Loan Coalition's website has been a huge help.”
Dept of Education
– “Our Department of Education rep was very helpful in helping us set up our branch
campus to process DL. She also helped us along, proactively calling to make sure we
completed all steps (bank account, COD, etc.)
– “Definitely our ED DL liaison.”
– “My Department of Ed contact and other schools that are DL with the same software
are tied.”
– “Department of Ed training webinars”
Software vendors
–
–
–
–
“Attending a Banner webinar on DL, which we paid for”
“Sessions at Datatel conference”
“The SCT conference in California in April”
“PeopleSoft listserv”
© Student Lending Analytics, LLC
Slide 20
SLA Flash Survey: Direct Lending Transition Process
Financial Aid Administrator Confidence Levels
Percentage of Total Respondents
100.0%
3%
8%
90.0%
6%
2%
10%
15%
80.0%
39%
70.0%
52%
60.0%
58%
50.0%
40.0%
30.0%
Not sure
Not confident
Somewhat confident
Very confident
50%
20.0%
21%
10.0%
37%
0.0%
FAMS Ready To
Process Direct
Loan
Parents/Students
Understand
Change
Readiness of Other
Depts.
Survey question: Describe your level of confidence that the factors described below will be ready by the July 1st deadline:
Note: Sample size for this question is 62 due to change in survey design on second day of survey
Source: SLA Flash Survey: Direct Lending Transition Process, May 2010
© Student Lending Analytics, LLC
Slide 21
SLA Flash Survey: Direct Lending Transition Process
Other Observations
Success requires a team effort:
– “The Business Office's attitude is ... it's all the FAO's work now!”
– “We are a little uneasy as to whether the business office will be ready”
Testing was an issue that came up frequently:
– “Lack of testing options for 2009-10 summer term”
– “The slow response of the department to getting our testing complete within our time
frame; shades of things to come...”
Costly to implement:
– “We're being forced to stretch an already overworked IT and Operations staff. We're
working on 2 Pell grants in a year, all of the new disclosures, figuring out funding
formulas without ACG/SMART. There's just be a tremendous amount of transition and
change over the last two years. We'll get the transition done; however, it's the other
priorities that we had to set aside that will suffer. I'm also surprised this survey didn't
ask about how much the transition is costing. In real dollars we have spent about
$15,000 for mailings and brochures. In administrative costs, for overtime pay, staffing,
answering phones, etc., the cost has yet to be determined but will be quite expensive.”
© Student Lending Analytics, LLC
Slide 22
SLA Flash Survey: Direct Lending Transition Process
Other Observations
Some skepticism and frustrations with COD system:
– “Lots of glitches at the Dept; issues with COD search of MPN's, COD site down,
changing status code of MPN without telling FAM's so its not supported. I'm not
confident COD can handle the volume.”
– “I am having a difficult time, trying to view individual records on the COD website.
Problem with the software.”
Significant effort to get students to sign new promissory note:
– “Our processes were very easy. It is an effort to get students to complete a prom
note. Others on campus did not initially understand their part in the process.”
© Student Lending Analytics, LLC
Slide 23
Thank You
Thank you again for your participation!
Please contact Tim Ranzetta if you have any additional comments
or questions regarding this survey
– Send email to [email protected]
– Phone: 650-218-8408
Look for more upcoming SLA Flash Surveys in the future
– Please provide us with topics that matter to you!
For more information on Student Lending Analytics, proceed to the
final six slides
© Student Lending Analytics, LLC
Slide 24
Student Lending Analytics
Background
Founded in 2007
Independent Research and Advisory Service with NO lender affiliations
Mission: Find best lenders for students through an analytically rigorous,
unbiased and comprehensive process
Services
–
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RFI Management of FFEL and Private Loans
Research
Successes to Date
–
–
–
–
–
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Managed RFI process at institutions with over one billion dollars in loan volume
Inside Student Lending, our monthly newsletter, reaches over 5,000 financial aid
administrators
Student Lending Analytics Blog has become the go-to source for breaking
developments and analysis on the student lending industry
SLA Flash Surveys have included the insights from over 1,500 financial aid
professionals on a variety of timely topics
Dozens of Schools Linking To Private Loan Options and SLA’s 2009 Private Loan Guide
which provides students and financial aid offices with an objective and focused list of lenders
SLA Student Satisfaction Surveys measures student satisfaction with lenders
© Student Lending Analytics, LLC
Slide 25
Unlocking the Mysteries of Private Student Loans
Student Lending Analytics: Resources Available
SLA Private Student Loan Ratings
2009 SLA Private Loan Series
– 2009 SLA Private Loan Guide
Paying For College Blog
Student Satisfaction Surveys
Coming Soon: Private Loan Quiz
© Student Lending Analytics, LLC
Slide 26
Unlocking the Mysteries of Private Student Loans
Private Student Loan Ratings
Available at http://www.studentlendinganalytics.com/ratings.html
Featured on front page of New York Times Business
Focused on evaluating eight lenders that appeared most frequently on over
700 school lender lists that SLA researched
Includes the following factors in ratings:
–
–
–
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Expected loan cost
Borrower benefit savings
Fee structure
Flexibility of repayment options
Customer service
Financial stability
SLA receives no compensation from any lenders on this list
New Service: Private Loan Insights to capture real-time information
about interest rates and approvals
© Student Lending Analytics, LLC
Slide 27
Unlocking the Mysteries of Private Student Loans
2009 SLA Private Loan Series
Most popular post: Shopping for Private Student Loans Makes a Difference!
– Results from 6 student loan applications yields interest rates between 7% - 12%
Before You Apply for a Private Student Loan
– Provides checklist of items to complete prior to considering a private student loan
What About Credit Unions?
– Explores the increasing role that credit unions are providing in the private student loan market
"Miss A Payment On Your Private Student Loan, You Could See Your Interest Rate Rise"
– Highlights two lenders that have clauses in promissory notes which could result in 2% increases in interest
rates triggered by one late payment
Borrower Benefits on Private Student Loans
– Provides examples of savings opportunities available to private loan borrowers
What Ingredients Go Into the "Secret Sauce"?
– Insights into the factors that lenders consider in making their credit decisions
Does It Make Sense To Shop Around For Private Student Loans?
– Provides details on new Fair-Isaac policy about the impact of applying for multiple student loans on your
credit score (hint: it helps student borrowers)
The Promissory Note
– Highlights the key terms to be aware of when evaluating lender promissory notes
What is the Meaning of "Instant Credit Response"?
– Reviews the on-line application process and analyzes the speed of lender credit reviews
Private Loan Fee Structure
– Benchmarks most common fees assessed by private lenders for both origination and servicing of loans
© Student Lending Analytics, LLC
Slide 28
The Student Lending Analytics Process
RFI Management
© Student Lending Analytics, LLC
Slide 29
Student Lending Analytics
Research Services
Inform financial aid offices on industry developments (implications for their
lender lists and relationships)
– Student Lending Analytics Blog
• Key resource for thousands of professionals in the student lending industry
• Timely insights to developments in student lending industry
– Alerts
• Legislation, lender exits, earnings calls, industry insight
– Monthly newsletters
– Webinars
• December 2008 – A Conversation about FFELP and Direct Lending
• May 2009 – Unlocking the Mysteries of Private Student Loans
– Surveys (summaries available on our website)
• FFEL vs. Direct Lending
• RFI Practices
• Implementing Increased Federal Stafford loan limits
• Availability of Alternative Loans
– Legislative and regulatory updates
– White papers
– Help Line to answer questions/resolve issues throughout the year
© Student Lending Analytics, LLC
Slide 30