# Presentation: 759161

## Session #56

- Emerging Oversight Issues
- Merecedes Zajicek
- Jerry Wallace

## Oversight Objectives 

- Promote program compliance
- Reduce improper payments
- Ensure program integrity

## Emerging Oversight Issues 	

- Lender Inducements
- Loan Verification Certificate
- Loan Consolidations
- GA and Collection Agencies
- 9.5% Audit Requirements
- Personally Identifiable Information (PII)
- Guaranty Agency Stability

## Lender Inducements

- Department guidance
- Dear Colleague, FP-07-04, 3/30/2007
- Borrower’s right to choose lender
- Electronic Announcement, 9/14/07
- Letter from the Secretary August 9, 2007 regarding proposed regulations
- DCL:  95-L-178 March 1995, school lenders to observe prohibitions and limitations
- DCL:  89-L-129 February 1989, guidance on prohibited and permissible activities

## Loan Verification Certificate

- Department Guidance
- DCL: FP-07-07/Gen-07-03, 5/22/07
- Completing LVC’s Timely
- Facilitates consolidating all loans
- Reduces capitalized interest
- Lessens likelihood of interest rate changes

## Loan Verification Certificate con’t 

- The LVC reviewed by Lenders could disclose
- Errors in setting up loans
- Loans made to ineligible borrowers
- Loans made by or loans sold to ineligible lenders

## Loan Consolidations 

- Marketing of Consolidation loans
- Oversight by ELT to ensure that activities of the beneficiary are in compliance with FFEL program rules and regulations

## . § 682 203   Responsible parties...

- § 682.203   Responsible parties...
- (b) *Trustee responsibility.* A lender that holds a loan in its capacity as a trustee assumes responsibility for complying with all statutory and regulatory requirements imposed on any other holders of a loan.

## GA and Collection Agencies

- Conflict of interest
- Examine Pre-claim & post default collection agency relationships
- Collection Agency Contracts
- Must comply with ED rules and regulations
- GA must maintain sufficient oversight to protect integrity of student loan program

##  § 682 203   Responsible parties... 

*Delegation of functions.*
- A school, lender, or guaranty agency may contract or otherwise delegate...
- This contracting or other delegation of functions does not relieve the school, lender, or guaranty agency of its duty to comply with the requirements of the Act and this part.

## § 682.416 Requirements

- 682.416 Requirements for third-party servicers
*Standards for administrative capability*
- Examine the servicer's compliance with the Act and applicable regulations

## § 682.416 Requirements (Con’t)

*Standards of financial responsibility*
- Examine the servicer's financial management of its FFEL program activities

## 9.5% Audit Requirements

- Department Guidance
- DCL: FP 07-01, 1/23/07
- Applicable requirements of the HEA and regulations that control loans acquired with tax exempt funding
- DCL: FP-07-06, 4/27/07
- Audit Requirements for 9.5 Percent Minimum Special Allowance Payment Rate

## Personally Identifiable Information (PII) 

- Department Guidance
- DCL: GEN-07-05, 9/7/07
- Title IV participants are not subject to Federal FOIA
- Consult with legal counsel to ensure compliance with FERPA
- NSLDS Access

## Guaranty Agency Stability

- Agency Reserve levels
- Factors:
- Recall
- Higher risk sharing %
- Lower GA fees
- GA activities and system changes

## Questions and Comments

- We appreciate your feedback
- Thank You

## Email/Websites

- _[Inducement@ED.gov](mailto:Inducement@ED.gov)__ or _
- Telephone: 646-428-3813
- Loan Verification Certificates
- _[LVC.Referral@ed.gov](mailto:LVC.Referral@ed.gov)_
- FERPA:_http://www.ed.gov/policy/gen/guid/fpco/index.html_

## Contact Information

- Contact information:
- Merecedes Zajicek
- Phone:312-730-1512
- Email: _[Merecedes.Zajicek@ed.gov](mailto:Merecedes.Zajicek@ed.gov)_
- Jerry Wallace
- Phone: 214-661-9515
- Email: Jerry.Wallace@ed.gov