NCHELP recently published information, which was confirmed by the Department of Education (DOE), that clarifies several aspects of the new hardship deferment regulations. Included in this clarification was the issue of whether a loan with a grace end date post-7-1-09 would automatically go into economic hardship deferment (EHD) status if the borrower had another loan already in deferment prior to 7-1-09. The DOE has now confirmed that loans with a grace end date post-7-1-09 would not be eligible to enter into the same EHD as the other loans.

T.H.E. is excited to let you know of a few upcoming enhancements. Students applying online with their cosigner present during their online session will be able to obtain an instant credit decision for their cosigner. A Cosigner Addendum may then be printed so the cosigner may sign the document and send it in along with their income verification documentation.

ED has stated that they will begin accepting participation agreements from “sponsors” (Lenders like T.H.E.) this week. They are also announcing eligible “Custodians” this week so we will begin looking at proposals for those services.

With the credit crisis still in full swing, what will happen when students go back to school this fall? Catch up on some of the latest industry developments with T.H.E.’s CFO Jamie Wolfe:

We are encouraged that Congress and the Administration are finally addressing a problem that we feel has been vastly underestimated. As of today, we feel they are still quite a ways from a solution that works and we encourage you to contact your Congressional representatives and press them to be, in Secretary Spellings’ words, “double-dog sure” they have a solution that provides uninterrupted access to FFEL loans for your students. Our website has been updated with the most current information you can share with your staff and students.

We hope that our series on lender RFIs and RFPs have helped you create a strong lender list practice. We’ve heard from a number of schools that in the past the RFI/RFP process has been driven by calendar dates. But considering today’s climate that includes such developments as the subject-to-change clause, lender term accuracy guides the process. Many schools choose to wait for confirmed terms before distributing any information to students.

New federal addendas and plain language disclosures for federal loans are in place at T.H.E. If schools provide paper MPNs to students, they should ensure they include the most current documents. The Department of Education Dear Colleague Letter FP-08-02 provides the details and copies of the revised forms.

January is the time when most lenders should have their 2008/2009 terms available. If you distributed an RFI or RFP in the last few months and received responses, check back with lenders and confirm the responses they gave. The issue is particularly timely this year because updated terms may be delayed due to market unrest.

With the next presidential election only a year away, FinAid.org, a nonprofit resource for student financial aid information, has started a presidential platform tracker. You and your students can check out the tracker and stay informed on the issue of education this election.

Have other useful election resources to share? Post your tips on the blog for your colleagues to read about.

Beginning this month, all borrowers applying for a private loan will need to provide their complete street address. Any applications containing a P.O. Box will come up as an error during processing and our loan processors will need to obtain the borrower’s street address. Borrowers using their school P.O. Box on an application must also include the school’s street address. This change is to comply with the overall requirements of the Patriot Act.

Following up on “Why Timing Your RFI/RFP Matters,” this article helps you prioritize your RFI or RFP questions and create a process for following up with lenders. We’ve also updated our RFI/RFP template. You can use the document for your reference when drafting an RFI/RFP of you own.

As many of you have probably noticed, debt management is quickly becoming a necessary component of any school’s borrower outreach. While some schools may already have programs in place, for many it’s a relatively new process.

One school that recently launched a brand-new program is the Graduate Theological Union (GTU). We spoke with Carlos Perez, director of financial aid for GTU, on how this new program came about and what it has accomplished.

The Request for Information (RFI) or Request for Proposal (RFP) process is quickly becoming an industry standard for schools. This year will prove to be interesting, thanks to the legislative changes creating uncertainty in the industry. Over the next several months, we will provide you with insight to the RFI/RFP process. This article, the first part of the series, deals with timing your RFI/RFP process.

When asked to provide terms for the upcoming 2008/2009 academic year, keep in mind that most lenders may not know what their terms will be yet. In an effort to provide a timely response to a school’s RFI/RFP, lenders may provide information that is “subject to change.”

Become an educator

As student debt continues to climb, are schools responsible for educating students about debt management? With new laws, direct-to-consumer marketing and the Internet, students are now arranging for their own loans and skipping the financial aid office. This leaves them vulnerable to terms and conditions they don’t understand or are not even aware of – full disclosure is not always required on the part of lenders until the promissory note has been signed, says Business Week.

Although recent legislation has tied the hands of financial aid officers in many ways, it is vital that schools provide students with the tools necessary to make a sound financial decision. According to Business Week, students need to realize that education is an investment with risks as well as benefits, and it’s up to the schools to make sure this message gets across.

Pending loans with first disbursements October 1 or later

With the College Cost Reduction and Access Act going into effect in October, please consider moving up the first disbursement date for new loans to occur before October 1, 2007. By doing this, students will qualify for more generous benefits, possibly saving them hundreds to thousands of dollars. Any loans that are disbursed after October 1, 2007, will be subject to the changes created under the College Cost Reduction and Access Act.

Consolidation loans

Due to recent legislation, please be advised that terms and conditions on new consolidation loans are also about to change. We will not be able to offer the same benefits as we have in the past on consolidation loans that are funded on or after October 1, 2007.

Lender advisory boards are the latest segment of the student loan industry to come under scrutiny. Amid claims that advisory board members are paid, either directly or indirectly through undue perks and kickbacks, some are suggesting that the easiest solution is to get rid of advisory boards altogether. Knowing the tremendous value our own T.H.E. advisory board has produced over the years, we strongly disagree with this notion.

To accomplish our nonprofit mission, lowering the cost of financing a higher education, in an efficient manner, we have always felt we need to address three key goals:

1. Deliver our message of savings to schools and borrowers 2. Receive application data and deliver funds in an efficient manner 3. Provide counsel to borrowers and their families throughout the life of their loans

NASFAA News recently quoted Tony Sozzo’s story from University Business, in which he urges FAOs to be proactive and find ways to save students money. Here’s the clip in case you missed it:

Proactive Financial Aid Officers Have Opportunity To Save Millions For Students (University Business Magazine)

“[A] new breed of direct-to-consumer lenders has evolved to help cover [college] costs, but most do anything but help. From lenders who promote ‘pioneering’ benefits that have been around for years, to those who offer private loans in exchange for 4 percent of your future earnings, the industry is saturated with predatory lenders who are in the business of misinformation. Their weapons of choice: Catchy marketing and fine print” University Business Magazine reports. “Now more than ever, financial aid officers (FAOs) are not only responsible for helping their students secure funding, but also saving students from predatory lending practices through financial education and advocacy.”

One lender admits there’s a problem with repayment benefits. So what’s the solution?

In a recent press release, one of the nation’s most prominent lenders scolded those few remaining companies that still charge origination fees on federal Stafford loans: “Rather than paying this fee on behalf of students, these lenders tout back-end benefits that very few students — less than 10 percent — will ever receive.”

From the looks of it, the student loan industry is beginning to address the dismal findings of Mark Kantrowitz, publisher of FinAid.org, whose research shows that “less than 10% of borrowers qualify for the full-term of their prompt payment discounts.”

This lender is right: most benefits don’t pay, and crediting origination fees is one great way to make financing more affordable. We agree; we were one of the first to offer
zero-fee loans.

Education lenders are being watched more closely than ever. Do you have the information you need to support your lending choices?

Last month one of the biggest names in student loans disclosed a federal probe into its marketing practices. This latest incidence of a lender under investigation comes as the House moves to cut interest rates — and considers some big changes to the business of lending. In this environment, many schools are reviewing their lender lists to make sure they can support their choices. How can you be sure of your partners?

With T.H.E., you don’t have to worry. One of the ways we can put your mind at ease, along with the monthly savings reports we send you, is our Class Savings Calculator, available online. It takes just a few seconds to input numbers (e.g., class size, loan amounts) for a typical class at your school to see how much money they can expect to save, as a group, with T.H.E.’s real and reliable repayment benefits.

At all of our recent advisory board meetings, we heard the same message: the origination fee credit is a valuable selling point for the T.H.E. Loan Programs.

We got the message, and we agree. Our non-profit mission is focused solely on lowering the cost of financing higher education, and this credit is one of the many ways we do that.

We’re pleased to announce this feature as part of our Grad PLUS terms for 2007-2008, effective for new loans disbursed on/after 4/1/07.

T.H.E.’s Grad PLUS terms for 2007-2008 include:

• 3% origination fee credit when the loan begins repayment
• 0% default fee
• .25% T.H.E. Bonus immediately after the first disbursement
• 1.3% T.H.E. Bonus when repayment begins