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Federal Updates

Shoptalk Online 490, February 10, 2009

Federal Updates

ED releases FY 2007 draft cohort default rates

FY 2007 draft electronic cohort default rate (eCDR) notification packages were transmitted via the Student Aid Internet Gateway (SAIG) to domestic Title IV-eligible schools that are enrolled in eCDR on February 9, 2009. Domestic schools that are not enrolled in eCRR will not receive notification packages from ED, but may download their cohort default rates and accompanying materials via the NSLDS Professional Access website.

Foreign schools will be mailed their notification package as an encrypted Portable Document Format (PDF) file on a CD-ROM. Foreign schools that receive a CD-ROM will also receive a separate letter providing the password needed for decryption. Since foreign schools may also sign up to receive future cohort default rate notification packages electronically via the SAIG, ED plans to provide cohort default rate information to all foreign schools electronically beginning with notification of the FY 2007 official cohort default rates in September 2009. For information on SAIG access, foreign schools can contact the Foreign School Team at (202) 377-3168.

Challenges
If a school identifies any data it believes to be inaccurate, it may challenge its draft CDR and request a verification and correction of errors. Challenges of FFELP data must be submitted to the guarantor responsible for managing that data within a 45-day timeline. The timeline is scheduled to begin on February 18, 2009, for domestic schools. For foreign schools, the time period begins on the receipt date of the notification letter and password, whichever is latest.

ED also provides every school with 30 calendar days to submit a participation rate index challenge to ED's Default Prevention and Management (DPM) division. A participation rate index challenge is intended to prevent potential adverse consequences anticipated by a school based on a high official CDR; but these challenges are based on a low number of student loan borrowers rather than on an allegation of inaccurate data.

Mailing IDC Challenges
Schools may mail IDC challenges to TG at one of the following addresses:

For regular mail:

TG
Attn: Compliance Analyst, Ken Johnson
P.O. Box 83100
Round Rock, TX 78683-3100

For overnight delivery services:

TG Distribution Center
Attn: Compliance Analyst, Ken Johnson
3500 Wadley Place, #303
Austin, TX 78728-1244

Cohort Default Rate Guide
ED's Cohort Default Rate Guide (Guide) is Web-based and can be accessed via the DPM website. Additionally, the Cohort Default Rate Guide Quick Reference (Quick Reference) is available as an easy-to-understand resource that provides a high-level overview of the CDR process. You can access both the Guide and Quick Reference at http://ifap.ed.gov/DefaultManagement/finalcdrg.html.

How TG can help
TG considers default prevention a top priority. The ever-changing environment in the financial aid industry as well as current economic conditions makes default prevention a critical activity. TG's default prevention team works with schools and lenders in developing strategies to more effectively prevent the default of student loans, and also works with borrowers by offering information about default and repayment. The team can help schools in a number of ways:

Understanding the rate calculation, including how the CDR is calculated and how it affects your campus;
Assistance in creating and implementing campus-based default prevention plans;
On-site consultation in the areas of financial literacy and default aversion;
Training on TG's Integrated Default Assistant™ (IDA™); and
Assistance in default rate challenges as well as policy questions regarding default aversion, including the new 3-year rate calculation.

Questions
For questions about the FY 2007 draft CDR challenge procedures, contact Ken Johnson at (800) 252-9743, ext. 4701, or send an message to ken.johnson@tgslc.org.

If you have questions about how you can use TG's default prevention team's service in your default prevention work, contact Rett Anderton or Joe Braxton, TG's default aversion consultants. Rett Anderton may be reached at (800) 252-9743, ext. 4765, or by sending an message to rett.anderton@tgslc.org. Joe Braxton may be reached at (800) 252-9743, ext. 4696, or by sending an message to joe.braxton@tgslc.org.

New loan purchase programs guidance

Last week, ED released Electronic Announcement (E-ANN) #47, which announces the first conduit under the Asset-Backed Commercial Paper (ABCP) Conduit Put Program, and the continuation of the 2007-08 Short-Term Purchase Program through February. Specifically, the last day that ED will accept offers to sell 2007-08 FFELP loans under the Short-Term Purchase Program will be Wednesday, February 25, 2009 (12 p.m., EST), with a purchase date of March 9, 2009.

Important reminders
Any FFELP loan holder that wishes to put 2007-08 loans to ED under the Short-Term Purchase Program must, if it has not already done so, submit its Master Loan Sales Agreement 2007-08 Adoption Agreement (and related forms) to ED. Since ED must approve the Agreement before the lender's offer is accepted, the last day to submit these documents is Wednesday, February 18, 2009.

Keep in mind that prior to ED's acceptance of an "Offer to Sell" under the Short Term Purchase Program, the seller or seller's servicer must have successfully completed intersystem acceptance testing with the ED Servicer demonstrating that the ED Servicer can receive and process both the Loan Transfer Conversion file and the Borrower Benefit Conversion file required for the Short Term Purchase Program.

The E-ANN also includes a chart that provides a summary of the relevant dates for the remaining Short-Term Loan Program sales.

For more information
The E-ANN is available online at http://federalstudentaid.ed.gov/ffelp.

ED announces Neg Reg schedule

In Shoptalk Online edition 485, TG announced that ED had recently published a Federal Register notice stating that it would be conducting negotiated rulemaking (a.k.a. Neg Reg) beginning this month. Last week, ED released tentative meeting schedules for the five teams that will be formed for this round of Neg Reg:

Team I — Loans-Lender/General Loan Issues
Team II — Loans-School-Based Loan Issues
Team III — Accreditation
Team IV — Discretionary Grants
Team V — General and Non-Loan Programmatic Issues

Each team is scheduled to hold three meetings. With the exception of the Accreditation team — which will begin meeting in March — each team will hold its first meeting in February and complete negotiations by May. The schedule for negotiations has been developed to ensure publication of the final regulations by November 1, 2009, with implementation of the new regulations no later than July 1, 2010.

More information
The tentative Neg Reg schedules are available on ED's Higher Education Opportunity Act (HEOA) Web page at www.ed.gov/policy/highered/leg/hea08/index.html#neg-reg. Shoptalk Online will provide regular updates to keep you informed about the progress of Neg Reg.