Federal Updates

ED Releases FY 2000 Cohort Default Rates

The Department of Education (ED) plans to mail the fiscal year (FY) 2000 official cohort default rates (CDRs) to schools on September 3, 2002. Additionally, once Secretary of Education Rod Paige announces the availability of the rates in an upcoming press release, the FY 2000 official CDRs will be available at http://www.ed.gov/offices/OSFAP/defaultmanagement/cdr.html. Currently, the 1999 CDRs are posted on this site.

As many of you are aware, ED changed its previous cohort default information publication process when it released the August 2001 "Cohort Default Rate Guide" (Guide). ED's Default Management team no longer sends a Guide to schools with their cohort default rates. The August 2001 Guide, received by schools with their FY 1999 official cohort default rates in September 2001, is considered the final paper release.

You can download a copy of the Guide (or parts thereof) at http://ifap.ed.gov/drmaterials/FinalCDRG.html. You can also contact EDPUBS (ED's service to identify and order publications and products) to request a hardcopy version of the Guide at 1-877-4EDPUBS or www.ed.gov/pubs. Please note that updates to this publication will be reflected only at http://ifap.ed.gov/drmaterials/changelog.html. Therefore, periodic review of the site is recommended for maintaining an up-to-date version of the Guide. Several changes were posted on IFAP this month at http://www.ifap.ed.gov/eannouncements/0712CDRChangePage.html.

In addition, as mentioned in Shoptalk Online Edition 168, two important loan disbursement provisions related to cohort default rates are scheduled to expire on September 30, 2002. These provisions allow schools whose three most recent official cohort default rates were less than 10 percent to:

1. deliver or disburse loans in a single disbursement for any period of enrollment that is not more than one semester, quarter, trimester, or four months, and
2. waive the requirement that loan proceeds of first-year, first-time borrowers be withheld for 30 days.

Consequences of Cohort Rates
Schools with official cohort default rates of 25 percent or greater for the three most recent fiscal years (FY 1998, FY 1999 and FY 2000) will lose FFEL, Direct Loan and Pell Grant Program eligibility, unless those schools successfully appeal the eligibility loss. Schools that were not participating in the FFEL or Direct Loan Program on October 7, 1998, and have not participated in those programs since that time, are exempt from the loss of Pell Grant Program eligibility.

Schools with official FY 2000 cohort rates that exceed 40 percent are also subject to loss of eligibility to participate in the FFEL and Direct Loan Program, unless the schools successfully appeal the eligibility loss. However, these schools will not lose eligibility to participate in other Title IV programs based on a single cohort default rate over 40 percent.

Cohort Rate Appeals and Adjustments
Schools may appeal official FY 2000 cohort default rates based on allegations of incorrect data, improper loan servicing and collection, and/or exceptional mitigating circumstances as described in federal regulations and the Guide. As in the past, appeals based on incorrect data and improper loan servicing of FFELP loans must be submitted to the school's guarantor(s) within specified time frames to permit the school's continued eligibility while the appeal is pending. Appeals regarding exceptional mitigating circumstances must be submitted by schools directly to ED. Appeals of Direct Loans are also submitted directly to ED.

Schools also may be eligible to submit an Uncorrected Data Adjustment or a New Data Adjustment based on official FY 2000 cohort rates. The Guide explains the procedures, time frames and other requirements for submitting these requests for adjustment.

Schools are advised to send cohort appeals to TG's Compliance Administrative Operations, at the corporate mailing or overnight shipping address, as appropriate.

TG's mailing address:
Texas Guaranteed
Attn: Compliance Analyst
P. O. Box 201725
Austin, Texas 78720-1725

Address for overnight delivery services:
TG Distribution Center
Attn: Compliance Analyst
2929 Longhorn Blvd., Suite 106
Austin, Texas 78758

Loan Record Detail Report
All schools with FY 2000 cohort rates of 10 percent or greater should receive a Loan Record Detail Report (LRDR), along with ED's notification of the official cohort rate. If a school does not receive its report at that time, or wishes to request the Loan Record Detail Report in an electronic format (also known as the eLRDR), the school may request a FY 2000 official eLRDR through ED's NSLDS web site at www.nsldsfap.ed.gov. For more details about the eLRDR, visit www.ifap.ed.gov/eannouncements/0211Draft2000eLRDR.html.

Questions
For questions about the FY 2000 official cohort default rate appeal procedures, contact Ken Johnson at (800) 252-9743, ext. 4701, or send an e-mail message to ken.johnson@tgslc.org.

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LaRS Documentation Deadline Approaches; Training Available Soon

The deadline for lenders to submit documentation required to participate in the new Lender Reporting System (LaRS) is fast approaching. Lenders must send three items (listed below) to ED by September 13, 2002, in order to begin using LaRS on its upcoming launch date, October 1.

What Is LaRS?
LaRS, sometimes called the e799, is the electronic version of the ED 799 form, which lenders submit on a quarterly basis to report:

• Loan origination fees and lender fees relating to the disbursement of new FFELP loans,
• Claims for interest and special allowance benefits, and
• Summarized loan activity information.

This revised reporting process will allow more than 4,000 FFELP lenders and servicers to complete and submit billings through a more timely and efficient electronic means. It will also facilitate ED's ability to receive payments faster than through the current process.

Documentation Required to Participate
In order to have access to LaRS by October 1 (in order for lenders to use LaRS for the reporting period ending September 30, 2002), lenders must send the following to ED's office of Federal Student Aid (FSA) by September 13:

• A signed, hardcopy Organization Participation Agreement (OPA). This document serves as the legal agreement between ED and the lender, servicer, and/or trustee. The purpose of the OPA is to eliminate the need for the submission of a paper form containing a signature each quarter when the data for the quarterly invoice is submitted electronically. This document must be on file at FSA prior to the submission of electronic quarterly invoices to ED.
• A Lender Application Process (LAP) application. This form is being used as a basis for current FFELP lenders and servicers to verify and update their demographic information that feeds into LaRS. The lender must provide and/or verify the following information, much of which is already contained in the system, through the online LAP application:
  
  • Lender contact name
  • Phone number
  • Mailing and e-mail addresses
  • Associated guaranty agency(ies)
  • Associated servicer(s)
  • Lender ID number(s)
  • Bank account and routing information
• A Financial Management System (FMS) Security Form. This document identifies the individuals who will actually be using the LaRS application.

All three of these documents are available on the Financial Partners web site at www.fp.ed.gov/PORTALSWebApp/fp/fms.jsp.

LAP/LaRS Training
FSA University Learning Management System will be providing training on the new LaRS system in September 2002. Check www.fp.ed.gov for upcoming details about the training.

Questions
For answers to questions regarding the new LaRS system, send an e-mail to FSA_LR@ed.gov.

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