Georgia Student Finance Commission March 2005 Conference

1. Georgia Student Finance CommissionMarch 2005 Conference

2. AGENDA • GSFC Origination Services Session • GSFC State Grants and Scholarships Session • GAcollege411 Session • Questions & Answers Session

3. GSFC Origination Services Session Tracy Ireland, Senior Manager of Originations Services Richard Hanson, Senior Manager of Collections and Claims Donna Hall, Senior Manager of Customer Relations Georgia Student Finance Commission March 2005

4. Topics of Discussion • GSFC Loan Products • GSFC Origination Services • GSFC Service Cancelable Loan Program • GSFC Guaranty Services • Collections Operations • Mapping Your Future

5. GSFC Loan Products • Participant in the Federal Family Education Loan Program • Federal Stafford Loan Program • Federal Parent Loan for Undergraduate Students (PLUS) Program • Federal Consolidation Loan Program • Offers alternative and service cancelable loans

6. GSFC Loan Products Continued • Federal Stafford Loans • Origination Fee of 1.75% • When borrower enters repayment, they will receive a .35% interest rate reduction for enrolling in GSFC’s auto debit program. • After 48 on-time payments, borrower will receive a 2% interest rate reduction.

7. GSFC Loan Products Continued • Federal Parent Loan for Undergraduate (PLUS) Students • When loan enters repayment, borrower will receive a 1.25% principal credit on the balance of the loan. • If the borrower enrolls in GSFC’s auto debit program, they will receive a .35% interest rate reduction • After 48 on-time payments, borrower will receive a 2% interest rate reduction.

8. GSFC Loan Products Continued • Federal Consolidation Loans • Offer the borrower the opportunity to consolidate all outstanding loans into one loan. • Borrower must have at least $7500 in outstanding loans. • Borrower will receive a .35% interest rate reduction for enrolling in GSFC’s auto debit program.

9. GSFC Loan Products Continued • Alternative loans • Cover more of the cost of going to college • Competitive rates • Flexible approval guidelines • Currently non school certifiable • New “alternative” offerings • School certifiable products • Greater flexibility

10. GSFC Origination Services: Specialized • GAcollege411.org • High School outreach • Expanded entrance/exit counseling • Financial aid awareness fairs • Printing for Financial Aid offices • Technical/back office streamlining • Financial aid counseling • Supplemental staffing to FAOs • Training on GSFC systems and services

11. GSFC Origination Services:Flexible Advanced Processing Options • Real Time Loan Guaranty and Response • ScholarNet • NelNet • ELM Resources • FASTLoans • FASTPLUS • PLUS Pre-Approval • Disbursement / refund options

12. GSFC Origination Services:Single Source Partners • Single entity that can process loans for any of our 21 partner lenders • Offers a single point of contact for schools, borrowers, and lenders regarding loan status • Collect and process promissory notes – utilizing e-signature or paper promissory notes • Allows the school to receive one disbursement roster for all lenders

13. GSFC Origination Services:Single Source Partners • Dedicated School Relations Specialist for each school – 14 years average experience • Dedicated Processing Staff for promissory notes – average processing time is 24 hours • School can receive funds within 48 hours of all information being received

14. GSFC Origination Services:Coming Soon • Real Time PLUS Pre approval Email Notification for FAST Products • Online Award Notifications • Integrated Entrance/Exit Counseling • Improved lender communications and business processes • Application Standardization

15. GSFC Service Cancelable Loan (SCL) Program Overview • Purpose and Benefits • SCL Program Description • Who is eligible • How is the obligation repaid • Critical Shortage Fields • Determining Critical Shortage Fields

16. SCL Purpose and Benefits • Increases quantity of workforce in critical professions • Attracts applicants in specific professions • Improves quality of workforce • Promotes job retention in Georgia

17. SCL Program Description-Eligibility • Residency • Citizenship • Academic Requirements • Other Standard Financial Aid Requirements

18. SCL Program Description-Repayment Service Repay • Student must graduate with a degree or certificate in the field for which they were funded • Graduates must work full time in the field for which they were funded • Service credit is awarded for each year of employment • How does GSFC know: • If the student obtained a degree • If the student is working in field

19. SCL Program Description-Repayment Trouble Spots • Unemployment • Active Military Duty • Enrollment • Disability • Death

20. SCL Program Description-Repayment Service Default • Loans enter cash repay if student fails to work as outlined in the critical shortage field • Repayment of the full amount less any service credit earned • Payment will include principal and interest. • Interest rates vary by program • GSFC works with borrowers to establish repay schedules

21. Current Critical Shortage Fields • Allied Health Related Professions • Stafford Loan with Service Option • ICAPP • Nursing • Teaching • Promise, HOPE Teacher, Promise II • Military • Georgia National Guard • North Georgia College • Georgia Military College • Scholarship for Engineering Education (SEE) • Agriculture Education

22. Determining Critical Shortage Fields Teaching • Georgia public schools are surveyed annually by the Department of Education • Positions with 5% vacancy rate and adequate number of vacancies are identified

23. Determining Critical Shortage Fields (Cont) Allied Health and Other Fields • Feedback and input from multiple sources: • Department of Human Resources • Georgia Hospital Association • Department of Labor • Georgia Postsecondary Schools • Legislators • GSFC Team researches and makes recommendations to GSFC Board

24. SCL The Future-Proposed Methods • Annual review of states workforce needs • Alignment with Georgia’s strategic needs • 500 new Social Worker Positions • Teaching and Nursing on list for foreseeable future • GSFC presents recommendations at the August Board Meeting • GSFC presents shortage fields to Governor with budget submission • GSFC Board has proactive role

25. GSFC Guaranty Services • GHEAC is the guaranty division of the Georgia Student Finance Commission • More than $2 billion outstanding • For the 2005-2006 academic year, GHEAC will again waive the guaranty fee • Saves students 1% of the loan upfront • Saves students $2 million • Since 1999 saved students > $12 million

26. GSFC Guaranty Services • Localized training, either at our offices in Tucker, or locations throughout Georgia • Default Prevention Program • Peer financial counseling • Partner in Chat Night • Partnerships to encourage responsible borrowing • Default prevention coordinator • Referrals to consumer credit counseling services • Graduating seniors statement of account

27. GSFC Guaranty Services Default Aversion • Calls and letters to past due borrowers • Information on deferments and forbearances • Delinquent borrowers reports • Only GSFC programs • State tax offset • Professional licensing • Lottery winnings

28. GSFC Guaranty Services Default Rates and FLSR • GHEAC’s default rate spiked • Expanded default aversion/prevention • Expanded collection efforts • FY 2003 4th largest rehab program in US • Borrower cleans up credit in 12 months • Over $9 million rehabilitated in FY2003 • FLSR health • GHEAC is number 8 in US

29. Collections Operations • How Default Rates affect you. • How you can help. • Stress importance of repaying loans in a timely manner • Advise students that there are programs available for them if they are not able to make payments on their loans. • Advise students of the GSFC website. • Gather forwarding address, phone number and e-mail information • We are here to help our borrowers. If they are having difficulty meeting their obligations they need to contact us, not avoid us.

30. Collections Operations • Flow of an account through delinquency to default • 15 days delinquent: Reminder Letter sent to borrower • 30 days delinquent: First collection letter • 35 days delinquent: Account loaded into the auto dialer. Account called every five days until default • 60 days delinquent: Second collection letter • 90 days delinquent: Third collection letter • 120 days delinquent: Demand letter • 180 days delinquent: Final demand letter

31. Collections Operations • Deferments and Forbearances – There are numerous programs available to borrowers that find it difficult, if not impossible to meet their loan obligations. • Unemployment • Financial Hardship • In-School • Military • Medical Residency

32. Collections Operations • Role of Default Aversion – Assist in the collection effort • Lender may refer accounts to Default Aversion between 60 and 120 days delinquent. • Default Aversion unit will send letters and call the borrower until the account is brought current or defaults. • Default Aversion does not collect, they counsel borrowers.

33. Collections Operations • Collections does not stop after default • Post Default Collections unit manages the collection effort after default. • Third party collection agencies are utilized to collect the debt. • Collection fees of 25 percent are added to the account balance. • Tax Offsets • Administrative Wage Garnishments • Professional License Suspension

34. Collections Operations • Bankruptcy does not get rid of your student loan obligation. • Bankruptcy will wipe out or lower many types of debt, but a student loan is exempt from bankruptcy proceedings. Thus, filing bankruptcy to eliminate your student debt will not work, it will only ruin your credit.

35. Collections Operations ALTERNATIVE COLLECTIONS: FEDERAL TREASURY OFFSET – Treasury offset certification occurs due to a gap in payment of at least 60 days. Certification enables the recovery of any federal proceeds due to the borrower. (i.e. tax refund, social security benefits) STATE REVENUE OFFSET – The default status with the state guarantor qualifies the borrower for potential offset of state revenue funds due. It does not matter whether they are paying or not. No gap in payment has to exist.

36. Collections Operations ALTERNATIVE COLLECTIONS (cont.): GEORGIA LOTTERY WINNINGS – Comparable to state offset, the mere existence of a defaulted student loan with the state guarantor qualifies the borrower for potential offset of lottery winnings. ADMINISTRATIVE WAGE GARNISHMENT – A non-court imposed process may be initiated to garnish borrower wages. The collection agencies that represent the guarantor have flexibility in establishment garnishment policy. The timing of this action being initiated may vary from agency to agency.

37. Collections Operations ALTERNATIVE COLLECTIONS(cont.): PROFESSIONAL LICENSING PROGRAM – The guarantor does a monthly match with various licensing entities to obtain current address information and to identify license holders with a gap in payment of at least 60 days. The potential for loss of license encourages the borrower to bring the account current or to start making payments. All of these programs work together in an effort to maximize recovery and to resolve the default.

38. Collections Operations • COLLECTION AGENCIES: • The Georgia Student Finance Commission no longer performs in-house collections on it’s default portfolio. All accounts are outsourced to third-party collection agencies. • List of Active Agencies: • General Revenue Corporation • OSI Outsourcing • Collection Technology Inc. • Risk Management Alternatives • GC Services • Pioneer Credit Recovery • Premiere Credit

39. Collections Operations • COMMON BORROWER ISSUES: • REINSTATEMENT OF ELIGIBILITY • PAID IN FULL LETTER REQUESTS • LOAN CONSOLIDATION STATUS •  LOAN REHABILITATION STATUS •  CREDIT BUREAU REPORTING • Confusion between lender reporting and guarantor reporting • Lender reports I-5 and delinquency • Guarantor reports I-9 and balance • GSFC has implemented use of E-OSCAR reporting to the credit bureaus.

41. What We’ll Cover Today • Entrance Counseling • Exit Counseling • Reporting / Confirmation Options • OSLC e-news • School • Students • Other Services

42. Why Use MYF for Online Counseling? Easy for the student to use • Entrance and Exit counseling • Supports Stafford & Perkins • Spanish available for Stafford

43. Why Use MYF for Online Counseling? • Benefits the school • Fulfills a federal requirement • Easy to Customize • Online service to compliment, or replace, counseling provided by a Financial Aid Office staff member • Eliminate postage costs by eliminating the mailing of exit counseling packets (estimating staff costs only, MYF saved schools more than $25 million dollars in FY2003)

44. Why Use MYF for Online Counseling? • Provide a service to our schools at a fraction of the cost of other methods • Leverage technology by taking advantage of the services offered by Mapping Your Future as well as sharing of ideas among sponsoring agencies • Enhance default prevention efforts with the many features offered on Mapping Your Future and through ExitExpress

45. Financial Aid Professionals

46. Confirmations • Download your confirmationsExport them, if you’d like! • By date (or date range) • By confirmation number • Search on student name or SSN • Receive E-mail confirmations • Print confirmation reports

47. ExitExpress • Guaranty agencies retrieve exit data on behalf of school • Increases security of exit data • More efficient information-sharing process • Aids default prevention efforts (more accurate and up-to-date information) • Save schools time and money

48. ExitExpress • Schools should verify that guarantor retrieved data • Guarantor Exception Report • Manually send data that the guarantor didn’t retrieve (satisfy requirement to send data to guarantor within 60 days) • Add guarantor if none selected • Guarantor Rejection Report • Verify SSN • Add correct guarantor • Manually send data that the guarantor didn’t retrieve

49. OSLC e-news • News you can use • Updates to Online Student Loan Counseling products • Regulatory requirements for loan counseling • Other new products and services • News your students can use • Upcoming chat events • New information for students and families

50. Other Mapping Your Future Resources • Personal finance tips and tools • Calculators • Loan Calculators • Budget Calculators • Consolidation Calculators • Loan Wizard • Deferment Navigator • Loan Cancellation, Forgiveness & Discharge Chart