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VOL. 25, NO. 12L
June 2008
Welcome to the June 2008 ISAC Update for lenders and servicers, which is a compilation of e-Messages sent through College Zone’s e-Messaging service throughout 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:
- Sharon Bankston, extension 2826
- 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 - Revised Default Fee Policy Approved
Sent to Marketing News, Announcements and Operational Updates, Announcements on June 30, 2008 At its June 27th meeting, the Illinois Student Assistance Commission (ISAC) approved a revision in the default fee policy for Federal Family Education Loan Program (FFELP) loans guaranteed by ISAC on or after July 15, 2008.
Revised Default Fee Policy (Agenda Item 11)
The Commission approved a revised policy effective for FFELP loans guaranteed on or after July 15, 2008. For ISAC-guaranteed federal Stafford and PLUS loans, ISAC will use its Student Loan Operating Fund (SLOF) to pay one-quarter (25%) of the 1% federally-mandated default fee on behalf of the student borrower. ISAC will no longer pay any of the default fee on behalf of parents borrowing federal PLUS loans. [For loans guaranteed between December 1, 2007 and July 14, 2008, ISAC has paid one-half of the default fee on behalf of student and parent borrowers. Prior to that, and beginning in 1999, no borrower with an ISAC-guaranteed FFELP loan was required to pay any of the default fee.]
These policy changes have become necessary due to information provided in a May 21, 2008 letter from the U.S. Department of Education (ED), indicating that loans it purchases under the lender liquidity provisions of the Ensuring Continued Access to Student Loans Act of 2008 will be transferred to the Federal Direct Student Loan Program servicer. This transfer will remove these loans from ISAC's guarantee portfolio and eliminate the revenues that would otherwise support our ability to pay a higher percentage of the default fee.
ISAC will continue to closely monitor its guarantee portfolio situation under the newly enacted lender liquidity provisions, and will keep our school and lender partners informed of new developments.
Other Commission Meeting Agenda Items
At its June 27th meeting, the following items were addressed as part of the agenda. Additional information regarding some of the items is provided in the June 27th Agenda Book, which can be accessed from the ISAC's Governing Board: The Commission page at collegezone.com.
- The Commission approved and adopted the omnibus rules amendments, as modified during the rulemaking process, so that they are effective for the 2008-09 academic year. (Agenda Item 14)
- The Commission received an update regarding the status of ISAC's FFELP portfolio lender servicing.
Commission Meeting to be Held Friday, June 27, 2008 - Conference Call Briefing Scheduled for June 30th
Sent to Marketing News, Announcements and Operational Updates, Announcements on June 23, 2008 The next regular meeting of the Illinois Student Assistance Commission is scheduled for 10:30 a.m. on Friday, June 27th at Carl Sandburg College in Galesburg.
The tentative agenda for the meeting includes:
- 2008-09 (FY09) Monetary Award Program (MAP) Recompute Formula
- FY09 MAP and Silas Purnell Illinois Incentive for Access (IIA) Program Application Volume Update - Request for Authority to Suspend
- Default Fee Policy
- Adopted Rules Amendments
- Update on FFELP Portfolio Lender Servicing
- FY09 Internal Audit Charter and Plan
- College Illinois!(SM) Prepaid Tuition Program
Results for items requiring action from the Commission will be available following the meeting via the 2008 Agenda Books page, which is located within the ISAC's Governing Board: The Commission section of the e-Library at collegezone.com.
Conference Call Briefing - June 30th
On Monday, June 30th, ISAC staff will offer a conference call briefing to provide an overview of the June 27th Commission meeting and an update on other ISAC-related topics. The conference call, for any interested financial aid staff, will be held at 10 a.m.
To participate, dial 888.767.9380 and enter the passcode: 9767339#.
New Student Loan Interest Rates, Loan & Fee Amounts Effective July 1st
Sent to Marketing News, Announcements and Operational Updates, Announcements on June 5, 2008 The U.S. Department of Education (ED) has released the interest rates that will be in effect for the 2008-09 academic year for fixed and variable rate Federal Stafford and PLUS loans in an electronic announcement dated
May 27, 2008.
- Loans with first disbursements on or after
July 1, 2008:
- 6.0% (fixed rate) for Federal Stafford subsidized undergraduate loans during in-school, grace, repayment, deferment and forbearance periods
- 6.8% (fixed rate) for Federal Stafford subsidized graduate loans during in-school, grace, repayment, deferment and forbearance periods
- 6.8% (fixed rate) for Federal Stafford unsubsidized undergraduate and graduate loans during in-school, grace, repayment, deferment and forbearance periods
- 8.5% (fixed rate ) for Federal PLUS loans
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, 2006 and June 30, 2008:
- 6.8% (fixed rate) for all Federal Stafford subsidized and unsubsidized loans during in-school, grace, repayment, deferment and forbearance periods
- Loans with first disbursements between
July 1, 1998 and June 30, 2006:
- 3.61% (variable rate through June 30, 2009) for all Federal Stafford subsidized and unsubsidized loans during in-school, grace and deferment periods
- 4.21% (variable rate through June 30, 2009) for all Federal Stafford subsidized and unsubsidized loans during repayment and forbearance periods
- 5.01% (variable rate through June 30, 2009) for Federal PLUS loans
Additionally, also effective with loans first disbursed on or after July 1st, dependent and independent undergraduate students will be able to borrow an additional $2,000 per year of unsubsidized Federal Stafford loans. ISAC's systems will be ready to accept and process requests for guaranty with these higher limits as of Monday, June 9, 2008. The new annual and aggregate loan limits are:
- Dependent undergraduates:
- $5,500 for freshmen
- $6,500 for sophomores
- $7,500 for juniors and seniors
- Independent undergraduates:
- $6,000 for freshmen and sophomores
- $7,000 for juniors and seniors
- dependent undergraduate - $31,000
- independent undergraduate - $57,500
Another change effective on July 1st is the decrease in the federal origination fee on Federal Stafford loans to 1% of the loan amount. The origination fee on Federal PLUS loans is not impacted and remains at 3% of the loan amount.
For more information about the new interest rates, loan limits and fee amounts for academic year 2008-09, refer to the Stafford and PLUS Loan Interest Rate chart and the FFELP 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.
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ISAC UPDATE
Electronic ISAC Update for May 2008 Available at College Zone
Sent on June 2, 2008 The May 2008 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 monthly electronic ISAC Update is a compilation of e-Messages sent to lenders and servicers in May via College Zone's e-Messaging service.
Topics covered in the May 2008 ISAC Update include:
- ISAC System Changes to Accommodate New Loan Program Rules
(sent May 28, 2008)
- ED Releases Details of Plan to Ensure Access to Federal Student Loans
(sent May 22, 2008)
- Workforce Reduction at ISAC
(sent May 20, 2008)
- ED Issues DCL on Preferred Lender Lists
(sent May 13, 2008)
- Mark Your Calendar for Upcoming Important Dates
(sent May 7, 2008)
- Continued Access to Student Loans
(sent May 2, 2008)
- Electronic ISAC Update for April 2008 Available at College Zone
(sent May 1, 2008)
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