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VOL. 27, NO. 10L
April - June 2010
Welcome to the April - June 2010 ISAC Update for lenders and servicers, which is a compilation of e-Messages sent through College Zone’s e-Messaging service throughout April, May and June. This e-Messaging service has replaced ISAC's use of printed newsletters and special e-mail lists as our primary means of communicating information to you.
The articles in this Update have been organized according to the Lender Zone subscription groups to which the messages were distributed via College Zone’s e-Messaging service.
Questions?
Questions regarding information in this ISAC Update can be directed to Lender Services by sending an e-mail message to lenderservices@isac.org or calling 800.477.4411 and speaking with one of the following staff members:
- David Barinholtz, extension 2822
- Denise Cannon, extension 2823
On occasion, you may be directed to a specific contact person or area; when this occurs, we will provide the appropriate information in the individual article or message.
MULTIPLE SUBSCRIPTION GROUPS
Commission Meeting Summary
Sent to Marketing News, Announcements and Operational Updates, Announcements on June 21, 2010 The following are highlights of action taken by the Illinois Student Assistance Commission (ISAC) at its June 18 meeting, which may be of interest to our lender and servicer partners.
Fiscal Year 2011 (FY11) Budget Spending Priorities (Agenda Item 7)
Prior to adjourning in late May, both chambers of the General Assembly approved a set of budget measures for the coming fiscal year (which has not yet been sent to the governor for action) authorizing a lump sum appropriation of $425,031,100 from the General Revenue Fund (GRF) for ISAC-administered scholarship and grant programs (this amount is at the same level as the final appropriation for FY10). In addition, an Emergency Budget Act was approved to give broad authority to the governor to manage the budget for FY11, including by establishing reserves.
The Commission approved allocating the lump sum appropriation as outlined in Table 1 of the agenda item, which reflects a March proposal by the governor to maintain level funding overall for ISAC-administered scholarship and grant programs. Although the total spent on such programs would be the same as that spent in FY10, this allocation increases the dollars dedicated to MAP [including dollars shifted from the Silas Purnell Illinois Incentive for Access (IIA) Program] and to the grant programs for dependents of police, fire, and correctional officers killed or disabled in the line of duty. The Commission also delegated authority to the Executive Director to make adjustments to this allocation during the fiscal year in order to optimize use of the appropriation.
Federal Rehabilitation Loans Lender Participation Agreement (Agenda Item 16)
The Commission approved the execution and delivery of a Federal Rehabilitation Loans Lender Participation Agreement with LoanAmerica.
Other Commission Meeting Agenda Items
Also addressed as part of the agenda were the following items. Additional information is provided in the June 18 Agenda Book, which can be accessed from the ISAC's Governing Board: The Commission page at collegezone.com. Specific agenda items may also be accessed by clicking on the appropriate link(s) below.
- The Commission approved and adopted the omnibus rules and amendments, as modified during the rulemaking process, so that they are effective for the 2010-11 academic year. (Agenda Item 4)
- The Commission approved the following agenda items related to the College Illinois!® 529 Prepaid Tuition Program:
New Student Loan Interest Rates Effective July 1, 2010
Sent to Marketing News, Announcements and Operational Updates, Announcements on June 14, 2010 The U.S. Department of Education (ED) has announced the interest rates that will be in effect for the 2010-11 academic year for fixed and variable rate Federal Stafford and PLUS loans in the Federal Family Education Loan Program (FFELP) and Federal Direct Loan Program (Direct).
Loans with first disbursements on or after July 1, 2010 (all loans disbursed on or after July 1 will be Federal Direct loans) have the following fixed rates:
- 4.5% for Federal subsidized undergraduate loans during in-school, grace, repayment, deferment and forbearance periods
- 6.8% for Federal unsubsidized undergraduate loans during in-school, grace, repayment, deferment and forbearance periods
- 6.8% for Federal subsidized and unsubsidized graduate loans during in-school, grace, repayment, deferment and forbearance periods
- 7.9% for Federal PLUS loans (parent and graduate/professional student borrowers)
As a reminder, the interest rate for Federal Stafford subsidized undergraduate loans will continue to decrease incrementally each year until July 1, 2012, when it is scheduled to revert to 6.8%.
Loans with first disbursements between July 1, 2009 and June 30, 2010 have the following fixed rates:
- 5.6% for Federal Stafford subsidized undergraduate loans during in-school, grace, repayment, deferment and forbearance periods
- 6.8% for Federal Stafford unsubsidized undergraduate loans during in-school, grace, repayment, deferment and forbearance periods
- 6.8% for Federal Stafford subsidized and unsubsidized graduate loans during in-school, grace, repayment, deferment and forbearance periods
- 8.5% (FFELP) and 7.9% (Direct) for Federal PLUS loans (parent and graduate/professional student borrowers)
Loans with first disbursements between July 1, 2008 and June 30, 2009 have the following fixed rates:
- 6.0% for Federal Stafford subsidized undergraduate loans during in-school, grace, repayment, deferment and forbearance periods
- 6.8% for Federal Stafford unsubsidized undergraduate loans during in-school, grace, repayment, deferment and forbearance periods
- 6.8% for Federal Stafford subsidized and unsubsidized graduate loans during in-school, grace, repayment, deferment and forbearance periods
- 8.5% (FFELP) and 7.9% (Direct) for Federal PLUS loans (parent and graduate/professional student borrowers)
Loans with first disbursement between July 1, 2006 and June 30, 2008 have the following fixed rates:
- 6.8% for all Federal Stafford subsidized and unsubsidized loans during in-school, grace, repayment, deferment and forbearance periods
- 8.5% (FFELP) and 7.9% (Direct) for Federal PLUS loans (parent and graduate/professional student borrowers)
Loans with first disbursements between July 1, 1998 and June 30, 2006 have the following variable rates through June 30, 2011:
- 1.87% for all Federal Stafford subsidized and unsubsidized loans during in-school, grace and deferment periods
- 2.47% for all Federal Stafford subsidized and unsubsidized loans during repayment and forbearance periods
- 3.27% for Federal PLUS loans
For more information about the new interest rates, refer to the Student Loan Interest Rates chart and the Direct Loan Limits, Rates and Fees chart, both of which are posted in the Federal Information area of College Zone's
e-Library. Feel free to print and copy the charts and use them for your own reference and/or for distribution to your students.
Commission Meeting to be Held Friday, June 18
Sent to Marketing News, Announcements and Operational Updates, Announcements on June 14, 2010 The next regular meeting of the Illinois Student Assistance Commission (ISAC) is scheduled for 9 a.m. on Friday,
June 18. The meeting will be conducted via video conference, and may be accessed at the James R. Thompson Center in Chicago and the Central Management Services Capital City Center in Springfield.
Some of the items on the tentative agenda for the meeting are:
- Adopted Rules and Amendments
- FY2011 Budget Spending Priorities
- FY2011 Monetary Award Program (MAP) Recompute
- Rehabilitation Loan Purchase Agreement
- College Illinois!® 529 Prepaid Tuition Program Budget, Investment Issues and Central Marketing Agent
The Agenda Book, providing the complete agenda and item descriptions, is available via the 2010 Agenda Books page (located within the ISAC's Governing Board: The Commission section of the e-Library at collegezone.com). The online Agenda Book will be updated within 1 - 2 days following the meeting to reflect action taken.
There are no plans for a conference call briefing following this meeting.
Mark Your Calendar for Upcoming Important Dates
Sent to Marketing News, Announcements and Operational Updates, Announcements on May 24, 2010 The Illinois Student Assistance Commission (ISAC) would like to make you aware of the following information, which may be of interest to you and/or your student loan borrowers.
June 18: Next Commission Meeting
The next regularly scheduled meeting of the Illinois Student Assistance Commission will take place on Friday, June 18, 2010, at the James R. Thompson Center in Chicago.
A listing of tentative agenda items will be available prior to the meeting via the ISAC's Governing Board: The Commission section of the e-Library. Dates and locations for all meetings scheduled in 2010 are available at the e-Library's Commission Meeting Schedule page. Agenda and meeting schedule information can also be accessed by selecting the link that appears beneath the "About ISAC" heading at the College Zone home page.
June 25: Last Day to Submit FFELP Initial Guarantee Requests
In order to allow Federal Family Education Loan Program (FFELP) Stafford, PLUS or consolidation loans with disbursements scheduled on or before the June 30, 2010 deadline [as stipulated in the Health Care and Education Reconciliation Act of 2010 (HCERA)] to be processed, the final date on which ISAC will accept initial guarantee requests is June 25, 2010. Operational details regarding the submission of initial guarantee requests, a listing of FFELP activities that will continue uninterrupted beyond the HCERA implementation, and a request to lenders for required documentation related to the electronic signature process are provided in a May 19 e-Message.
Holiday Schedules
May 31: Memorial Day Holiday
July 5: Independence Day Holiday
In observance of the Memorial Day and Independence Day holidays, ISAC offices will be closed on Monday, May 31, 2010, and on Monday, July 5, 2010, respectively. Our offices will reopen on the first business day following each holiday.
Loan records received at ISAC on the holidays, as well as disbursement records received at the National Disbursement Network (NDN), will be processed the following business day. This means that, for holidays that fall on a Monday, CommonLine or Common Account Maintenance (CAM) files will be processed on the following Tuesday, with results available on Wednesday (or the next available day for any schools opting to receive NDN files on specific days of the week). Note that ELM Resources will continue to process and transmit files on the holidays.
Reminder: Please refer to the above "June 25: Last Day to Submit FFELP Initial Guarantee Requests" entry for details regarding how HCERA implementation will impact the processing of FFELP loan disbursements.
For Assistance
Remember that you can access collegezone.com anytime, or send an e-mail message to ISAC's Lender Services Department. With the exception of days when the ISAC offices are closed, ISAC staff will review and respond to messages during regular business hours (Monday through Friday, 8:30 a.m. - 5 p.m. CT).
Signing of Reconciliation Bill Eliminates FFELP
Sent to Marketing News, Announcements and Operational Updates, Announcements on April 7, 2010 With the signing of the Health Care and Education Reconciliation Act of 2010 by President Obama on March 30th, the Federal Family Education Loan Program (FFELP) has been eliminated. According to guidance from the U. S. Department of Education (ED) via DCL GEN-10-05, P-10-02, the new law prohibits any new (first) disbursement on FFELP Stafford, PLUS or consolidation loans after
June 30, 2010.
Impact on Summer Term Loans
With regard to disbursement of loans for the upcoming summer term, ED also provided guidance that stipulates that second and subsequent disbursements for loans first disbursed prior to July 1, 2010, can be made; and in fact, lenders are obligated by regulations to make these subsequent disbursements. However, guarantees for any loan on which the first disbursement is not made before July 1st will be void, regardless of the date of guarantee.
One remaining issue still to be resolved is loans that could have been disbursed prior to July 1, 2010, but were not because the borrower is subject to the 30-day delay for first-time, first-year borrowers. Information will be provided on this issue once it becomes available.
ISAC Guarantee Cessation Date and Continuing Functions
ISAC analyzed 2010-11 guarantee data, including loan term and first disbursement dates, to make a determination of a final guarantee date for FFELP loans. Due to the prohibition of first disbursements after June 30, 2010, ample time will be needed to allow for any disbursements that are scheduled to be made ahead of that date. The final guarantee date has been established as
June 25, 2010. Further operational details will be forthcoming, as needed.
While guarantee and loan origination functions at ISAC are drawing to a close, the administration and oversight of our $7.4 billion FFELP portfolio will continue uninterrupted, including:
- Loan maintenance activities (updating or cancelling loan records, demographic updates, etc.)
- National Student Loan Data Systems (NSLDS) Lender Manifest reporting
- Unreported Loans reporting
- Default Aversion and skip tracing assistance
- Default Aversion Assistance Request (DAAR) information to schools
- Claims processing
- Electronic Data Processing using industry standards
- Common Account Maintenance activities
- loan maintenance (record types 7, 9, 10, 24)
- DAAR records (record type - 40 series)
- electronic claims (50/60 series)
- Lender Manifest via File Transfer Protocol (FTP)
- Unreported loans via FTP
- Rehabilitation and assignment of at-risk loans
- Collection of defaulted loans
Moving Forward with our Mission
Even though guarantee and loan origination activities at ISAC will cease in the near future, we intend to keep moving forward to fulfill our mission of making college accessible and affordable for all Illinois students. To that end, we will carry on with customer service in all aspects of college planning and attendance - for students, parents, counselors, financial aid administrators, lenders and other advocates of higher education. Our college access and outreach efforts will continue unabated, as will the delivery of scholarship, grant and prepaid tuition program benefits. Training assistance and the activities carried out by our compliance and research areas will continue as always. Additionally, our Lender and School Services Communication Centers are available to assist you, either via telephone or e-mail, as noted below.
In short, our position is solid, and our goals for the future are clear as we transition to a "post-FFELP environment." We would like to express sincere gratitude for the partnership and collaboration of our student loan partners throughout the last four-plus decades, and we look forward to many more years of working together in the service of the students and families of Illinois.
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OPERATIONAL UPDATES, ANNOUNCEMENTS
Reminder: ISAC Providing Monthly Data Regarding Borrowers Whose Loans Have Been Rehabilitated
Sent on June 2, 2010 This message is to remind you that, effective since
April 2010, the Illinois Student Assistance Commission (ISAC) is providing lenders/servicers with data regarding borrowers whose previously-defaulted loans have been rehabilitated through ISAC. This data is intended to assist lenders and servicers in meeting the Higher Education Opportunity Act (HEOA) requirement that - beginning no later than July 1, 2010 - lenders remove the negative trade line of default from the credit history of borrowers whose loans have been rehabilitated.
- Data is sent via e-mail on a monthly basis, in a password-protected Microsoft Excel® spreadsheet.
- Spreadsheets are sent between the 20th and 30th of each month, and include loans that were rehabilitated in the prior month (for example, the file received in late June 2010 will provide data for loans rehabilitated in May 2010).
- The spreadsheets are not cumulative.
Provide ISAC with Contact Information
If you have not already done so: In order to ensure that data is received in a timely manner, please provide ISAC with the name and e-mail address of the individual at your institution to whom the monthly files should be sent. Send contact information to LaCora Jones (ljones@isac.org) and Paul Oliver (poliver@isac.org).
ISAC's FFELP Origination Close-out Plan: Initial Guarantee Requests Due on or before June 25, 2010
Sent to on May 19, 2010 The Health Care and Education Reconciliation Act of 2010 (HCERA) prohibits any new (first) disbursements on Federal Family Education Loan Program (FFELP) Stafford, PLUS or consolidation loans after June 30, 2010. As was originally communicated in an April 7 e-Message, in order to allow loans with disbursements scheduled on or before June 30 to be processed, the final date on which the Illinois Student Assistance Commission (ISAC) will accept initial guarantee requests is June 25, 2010.
The following provides operational details regarding the submission of initial guarantee requests, a listing of FFELP activities that will continue uninterrupted beyond the HCERA implementation, and a request to lenders for required documentation related to the electronic signature process. We are sharing this information with both financial aid directors and lender operational staff so that colleges and lenders can work together to ensure that all initial guarantee requests are submitted no later than the June 25 deadline.
Submitting Initial Guarantee Requests for FFELP Stafford, PLUS and Consolidation Loans
- Friday, June 25, 2010 is the last date on which ISAC will accept FFELP initial guarantee requests, including:
- CommonLine Application Receive files
- CommonLine Change Request files
- Loans processed as part of a Certificate of Blanket Guaranty
- Common Account Maintenance Consolidation Loan Record types:
- Initial guarantee requests received after June 25, 2010 will be returned to the sender with the following reject codes:
- CommonLine Application Receive files
- CommonLine Change Request files
- Loans processed as part of a Certificate of Blanket Guaranty
- Common Account Maintenance Consolidation Loans
- Record type 17 will receive edit code: 17013002
- Record type 18 will be reviewed manually
- Record type 20 will receive edit code: 20000010
Information regarding the submission of loan guarantee requests can be found within the Loan Certification area, located in the Loan Origination section of the FAA Zone's Processes area at collegezone.com.
FFELP Activities to Continue Uninterrupted after HCERA Implementation
- ISAC will continue the following FFELP activities, without interruption:
- NSLDS Lender Manifest Reporting [including data exchange via File Transfer Protocol (FTP)]
- Unreported Loans Reporting (including data exchange via FTP)
- Loan maintenance requests submitted manually via e-mail, phone or fax
- Default Aversion and Skip Tracing
- Claims Processing
- Rehabilitation of At-Risk Loans
- Collection of Defaulted Loans
- Common Account Maintenance Activities:
- Student Demographic Change (record types 3 and 5)
- Loan Maintenance Activities (record types 7, 9, 10 and 24)
- Default Aversion Assistance Requests (40 series)
- Electronic Claims (50 and 60 series)
ISAC Requesting Required Documentation from Lenders
As part of our FFELP origination close-out activities, ISAC is requesting that lenders using an electronic signature (e-signature) process provide documentation that would be required in the event that the U.S. Department of Education (ED) received a borrower's challenge regarding the enforceability of a Master Promissory Note (MPN). Specific details (including what documentation is required, and how it should be submitted to ISAC) are provided in a sample letter that may be accessed via the Electronic Signatures page, located in the Loan Origination section of the Lender Zone's Processes area at collegezone.com.
Questions?
If you have any questions regarding ISAC's plans for implementing the HCERA requirements, please do not hesitate to contact us as indicated below.
Unreported Loan Reports to be Distributed in May
Sent on April 26, 2010 The Illinois Student Assistance Commission (ISAC) plans to distribute National Student Loan Data System (NSLDS) Lender Manifest Reports of Unreported Loans (Unreported Loan Reports) during the month of May 2010. We provide these reports to lenders and servicers twice a year, in order to assist in determining whether all loans that appear in a loan portfolio have been reported to ISAC.
While the majority of lenders and servicers will receive the Unreported Loan Reports electronically via the File Transfer Protocol (FTP) process, those who have not taken the steps necessary to exchange NSLDS-Lender Manifest data via FTP will receive the reports via fax.
The Unreported Loan Report will list the following:
- open loans that have not been updated via Lender Manifest (this could be due to the inability to match incoming loan records to information on ISAC's database, or due to errors causing the record to reject); and
- any loan with an open loan status that does not reflect an update within the past 180 days.
Once the report is received in May, please take the time to review the loans listed and make the necessary data corrections so that these loans can be successfully reported on your next monthly Lender Manifest submission.
ISAC to Provide Monthly Data Regarding Borrowers Whose Loans Have Been Rehabilitated
Sent on April 9, 2010 Since August 2009, the Illinois Student Assistance Commission (ISAC) has been sending letters to lenders and servicers regarding the Higher Education Opportunity Act (HEOA) requirement that - beginning no later than
July 1, 2010 - lenders remove the negative trade line of default from the credit history of borrowers whose loans have been rehabilitated.
ISAC Will Provide Monthly Spreadsheets
This message is to notify you that, in order to assist you in fulfilling the HEOA requirement, we will be providing lenders/servicers with data regarding borrowers whose previously-defaulted loans have been rehabilitated through ISAC.
- Data will be sent via e-mail on a monthly basis, in a password-protected Microsoft Excel® spreadsheet.
- The first spreadsheet will be sent in late April 2010, and will include loans that were rehabilitated during March 2010.
- Subsequent spreadsheets will be sent between the 20th and 30th of each month, and will include loans that were rehabilitated in the prior month (for example, the file received in late May 2010 will provide data for loans rehabilitated in April 2010).
- The spreadsheets will not be cumulative.
Please Provide ISAC with Contact Information
In order to ensure that data is received in a timely manner, please provide ISAC with the name and e-mail address of the individual at your institution to whom the monthly files should be sent. Send contact information to LaCora Jones (ljones@isac.org) and Paul Oliver (poliver@isac.org).
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ISAC UPDATE
Electronic ISAC Update Moving to Quarterly Schedule - March 2010 Newsletter Now Available
Sent on March 1, 2010 Change in Newsletter Schedule
Effective immediately, the ISAC Update for lenders and servicers is moving to a quarterly (rather than monthly) schedule. This means that future electronic newsletters will be available at the beginning of each quarter (January, April, July, and October), and will be the compilation of information announced via an e-Message to any of the Lender Zone subscription groups during the previous quarter.
If you have not already done so, you are encouraged to sign up for the "Marketing News, Announcements" and/or "Operational News, Announcements" subscription groups (in addition to the "ISAC Updates" subscription group, from which you received today's message), in order to ensure that you receive communications from ISAC as soon they are made available. To subscribe to additional groups and/or confirm to which groups you are currently subscribed, enter your e-mail address at the Manage Subscription/Unsubscribe page at collegezone.com.
March 2010 ISAC Update Available
The March 2010 edition of the ISAC Update is now available for your review within the ISAC Publications section of College Zone's e-Library. This version of the electronic ISAC Update is a compilation of e-Messages sent to lenders and servicers in March via College Zone's e-Messaging service.
Topics covered in the March 2010 ISAC Update include:
- Summary of March 26 Commission Meeting
(sent March 29, 2010)
- ISAC Offices Closed Friday, April 2
(sent March 26, 2010)
- Mark Your Calendar for Upcoming Important Dates
(sent March 22, 2010)
- Commission Meeting to be Held Friday, March 26
(sent March 19, 2010)
- Join ISAC in Springfield for "Making
Connections: u r ILASFAA"
(sent March 16, 2010)
- Electronic ISAC Update for February 2010 Available at College Zone
(sent March 1, 2010)
The next edition of the ISAC Update for lenders and servicers will be available in July 2010.
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