# Presentation: 052516

## Slide 1

## Session 49

- Emagine There’s No Paper, It Isn’t Hard to Do
- FFEL Panel on Electronic Promissory Notes

## You Say You Want a Revolution...

- “Holy grail” of paperless process
- Removes last barrier to a fully electronic student aid process
- Entire process can now be electronic from application -> award -> disbursement -> servicing
- Service at the speed of light!
- E-sign coupled with other recent changes allow us to serve ALL customers in real-time
- Allows schools to re-think “traditional” process flows and compress timeframes
- Engaging aid processes
- With e-sign, incorporation of a web application process offers greater creativity and control over a student’s aid process

## The Long and Winding Road...

- E-Signatures in Global and National Commerce Act passed June 30, 2000
- Department of Education published Dear Colleague Letter containing _voluntary_ e-signature standards and “safe harbor” on April 30, 2001
- Department of Education and NCS launch STAN (_ST_udent _A_uthentication _N_etwork) service on June 29, 2001 allowing use of FAFSA PIN for e-signature
- FFEL collects first e-signed MPN’s in the country
- Department of Education revises DCL allowing electronic delivery of PIN to be covered under safe harbor on July 25, 2001

## Come Together...

- ED guidance provides minimum “safe harbor” standards for the implementation of electronic signature processes in the FFEL, Direct, and Perkins Loan programs
- Conforming to the “safe harbor” standards will assure that ED will stand behind the loan if the e-signature is challenged in court
- Standards are voluntary - lenders and schools *may* choose to ignore and take risk of loans being deemed unenforceable solely because of p-note

## Across the Universe...

- DCL standards apply to:
- Master promissory notes (MPNs) or loan applications (ex. Perkins, PLUS, etc.)
- Forbearance agreements
- Deferment requests
- Cancellation requests
- New repayment agreements
- Requests to discharge a loan

## Help!...

- SFA Pin process the most pervasive - but has limitations
- Currently, not all borrowers complete FAFSA
- Currently, mail requirement defeats real-time benefits
- Movement to electronic delivery (est. January 2002) will not be real-time
- Can only be used for Title IV aid
- PIN request site to address non-FAFSA filers
- Discussions to allow use outside of Title IV - but don’t count on it

## We Can Work it Out...

- DCL is a “voluntary” standard so other solutions are possible
- Within DCL “safe harbor”, other solutions can be used provided they follow guidelines
- Use of third party authenticator (not school)
- Shared secret sent via secure means
- Lenders and schools can decide on processes outside of the safe harbor with some risk
- PIN/password relying on school certification as authentication
- School assigned PIN/password

## I am the Walrus...

- An “electronic signature” is an electronic symbol or process attached to or logically associated with a record, and executed by a person with intent to “sign” the record.
- An electronic signature is *not *technology specific.
- These technologies are not used to “sign” the document, but to prove that the person affixing the e-signature is authorized to do so (attribution)
- Attribution can be based upon:
- What You Know - Shared secrets  (e.g. PIN, Date of Birth, Mother’s Maiden Name, SSN, etc.)
- What You Carry (e.g. smart card, digital certificate, etc.)
- Who You Are (e.g. fingerprint, retinal scan, digitized signature, etc)

## Magical Mystery Tour...

- Unlike a traditional “wet” signature, an electronically signed document involves multiple steps:
- Disclosure informing the borrower of their rights
- Consent from the borrower to use an electronic process
- Authentication of identity to prove the person is who they are claiming to be
- “Signature” accepting the transaction
- Borrower *always* has the option of a paper process

## It’s Getting Better All the Time...

- Technology is rapidly evolving
- Benefits of e-sign in all industries will drive wider scope solutions rapidly
- Cost of technologies is dropping
- Potential for smart cards and biometric devices becoming widespread in the near term

**Notes:**
Technology is rapidly evolving
Benefits of e-sign in all industries will drive wider scope solutions rapidly
Cost of technologies is dropping
Cost of a fingerprint scanner was over $500 2 years ago, now they are less than $70.  
Microsoft announced in May this year it will support these devices in its next versions of Windows
Potential of smart cards and biometric devices becoming widespread in the near term which answers some existing concerns about authentication

## Ticket to Ride...

- On-line promissory note and other web based processes have been available for years
- Few schools have adopted web based notes into their standard process flow though
- Core borrower demographic prefers to go on the web for information and services
- E-sign is the “killer app” to move financial aid on-line

## All We are Saying, is Give E-Sign a Chance...

- Benefits ALL participants in the process, so why wait?
- Convenience, speed and better information for students and borrowers
- Speed and cleaner process reduces workload and improves cash flow for schools
- Reduced workload and costs for lenders and their business partners
- Potential for fraud and default reduction benefits taxpayers

**Notes:**
When we first started kicking around the idea of esign internally It took us about 3 seconds to decide we wanted to implement as soon as possible. 
 - Benefits ALL participants in the process, so why wait?
Convenience, speed and better information for students and borrowers
Speed and cleaner processing reduces workload and improves cash flow for schools
Reduced workload and costs for us and our business partners
Potential for fraud and default reductions benefits taxpayers
 I know others have delayed saying July was too late - they’d missed the processing window for 2001-02 but given the clear benefits, low risk, increase in non-traditional volume and some thoughts how it could be useful for last minute loans, lost notes, etc it was a no brainer.

Add to that the limited work needed to implement and we were there - helping FFEL lead the way

## AES Stafford MPN on the Web

**Student logs in, selects school and lender**
**	****(Note: If a loan has been pre-certified, the school will be displayed and cannot be changed.)**

## AES Stafford MPN on the Web

**Student’s name and address data are pre-populated using data from their log in account**

## AES Stafford MPN on the Web

**Student must provide two separate references with different U.S. addresses**

## AES Stafford MPN Completion Options

- Print at their printer
- Have AES print it and mail it to them
- Save the form for completion at a later date
- Sign electronically using their USDE PIN

## Electronic Signature Process

- Student gives consent to complete the Stafford MPN process electronically

## MPN Review

- Student reviews a draft of the MPN and must agree to the loan terms and conditions as well as Rights and Responsibilities

## Signing the MPN

- Student is informed of impending signature, MPN data and clicks are stored

## The STAN Process

- The Student Authentication Network (STAN) is a secure service for authentication of the borrower’s SFA PIN and stable data (last name, birth date, SSN) against the SFA database to enable borrowers to “e-sign” their loan promissory notes
- Student is redirected to the STAN site

## The STAN Process

- Student enters SSN, DOB, Name and PIN
- STAN confirms the student’s identity
- Student is redirected back to the AES site with authentication string
- AES confirms that STAN is the referring site

## Confirmation

- Student reviews MPN, obtains confirmation number, and confirms review of MPN

## This is it!

- Final confirmation of what has been agreed to and submission of MPN

## Your Electronic Documents

- Student logs in and selects option to view electronically signed documents

## Your Electronic Documents

- Saved version of completed MPN features a final page that provides a record of the Electronic Signature transaction

## Advantages of the AES MPN on the Web

- Edits against the student data housed in OneLINK in an attempt to determine if a MPN is needed (reduces the risk of duplicate requests)
- If a pre-certified loan exists in OneLINK, the student is presented with a MPN which contains the Unique ID and certified loan amounts

## Advantages of the AES MPN on the Web

- Multiple completion options available to the student
- Borrowers are presented with option to complete loan entrance counseling
- Satisfies the requirements of the “Standards for Electronic Signatures in Electronic Student Loan Transactions” issued by the Department of Education

## Advantages of the AES MPN on the Web

- Schools can choose:
- To allow students to reduce the pre-certified loan amount when completing the MPN
- To link to the MPN from their web site

## Advantages of the AES MPN on the Web

- Coming soon, schools will have the option:
- To prevent students from completing the MPN online prior to pre-certification
- To provide their preferred lender list in their selected order
- To provide school specific instructions to their students

## Mission Statement

- The University of Phoenix is a for-profit institution dedicated to providing educational opportunities to working adult students whose access might otherwise be restricted or non-existent.

## Quality Lifetime Learning, Anytime, Anywhere

## University of Phoenix Facts

- Private, for profit higher education institution
- First class held in 1976 – celebrating 25 years of quality education
- Bachelors, Masters, Doctoral degrees, and professional certificate programs
- Programs in Business, Technology Mgmt, Information Systems, Education, Counseling and Nursing

## University of Phoenix Facts

- Operating in 20 states, Puerto Rico, Canada & the Netherlands
- 35 main campuses and 72 learning centers
- Worldwide learning through University of Phoenix Online (UOPX)
- 103,245 student enrollment (29,000 online)

## Financial Aid Facts

- 55% of UOP students receive financial aid
- $522+ million loan funds awarded for 2001
- Approx. $24 million in PELL Grant funds awarded for 2001
- Cohort default rate FY’99 – 4.6%
- Over 300 lending & guarantor partners
- Preferred Lender List – 5 national lenders
- ELM & NDN (99.7% of loan volume)

## Financial Aid Basics

- Academic Year - 45 Weeks / 27 Credits
- Borrower Based AY – Open Entry / Open Exit
- Loans & Pell Grants Certified Daily
- Disburse Funds Daily
- PeopleSoft Financial Aid, Oracle Financials and other legacy systems

## Financial Aid Process

- Campus Intake & Counseling
- Centralized Certification, Disbursement & Refund Processing
- Centralized Training & Implementation
- Centralized Lender Relations
- ELM – Single Point of Contact
- EFT Disbursements & Returns via the ELM/NDN

## Our Current Financial Aid Focus

- Ensure Regulatory Compliance
- Improve Customer Service
- Reduce Transaction Costs
- System Automation & Integration

## Benefits of Electronic Signature

- Promotes a paperless (fully electronic) process
- Convenience to students, schools & lending community
- Reduces processing time – no snail mail
- Closer to real time process
- Online process for admissions, financial aid application, bill payment & account inquiry, etc

## And there’s more....

- Can be used for both FFELP & private loan products
- Works with all process flows
- Opportunity for dynamic and creative debt counseling and financial advice
- Better processes and knowledge = lower default rate
- Fraud protection – reduced risk with authentication
- Why not use it?

## Implementation Strategy

- Functional Considerations on Campus
- Technology Implications
- Business Process Changes
- Timing

## Functional Considerations on Campus

- Student population served
- Traditional vs. Non-Traditional
- Admissions
- Academic Transcripts - SPEEDE/EDI & XML
- Admissions/Enrollment paperwork
- Registrar
- Course selection and online scheduling
- Accessing grades and address updates

## Functional Considerations on Campus

- Financial Aid Office
- FAFSA on the Web
- Master Promissory Note
- Institutional Application
- (authorization to apply funds)
- Verification Documents
- Business Office
- Finance Agreements
- Bill payment

## Technology Implications

- Variety of methods
- Online Application & Web Integration
- Imaging Workflow opportunities
- Communication with lenders, business partners
- Electronic Record Retention and Maintenance
- Electronic Record Integrity

## Business Process Changes

- Traditional Flow vs. Non-Traditional Flow
- Lender vs. Guarantor Flow
- Guarantee Only, Guarantee & Print or Print & Guarantee
- Business Process Flow
- Lender or Service Provider Impact
- Implement Existing Process with E-Sign hook
- Evaluate Current Process and Redesign

## Or let someone elsedo all the work...

- From school’s online process, direct students to school’s preferred lender list with links
- Direct students to lender’s website
- Work in conjunction with your lender, guarantor or service provider

## Timing

- Why not now?
- Lenders and service providers are ready
- Low tech approach
- Flexibility
- School controlled

## UOP’s E-Sign Solution

- Enhanced Online Web Application Process
- Initial Focus on MPN
- Imaging Workflow
- Web Integration
- Universal Real Time Method
- “one stop shopping” solution
- API Links to Preferred Lender’s E-Sign Website

## Electronic Signature has the opportunity to revolutionize student financial aid but only if the entire
community embraces it

**community embraces it**

## Questions?

## Contact Information

- We appreciate your feedback and comments. We can be reached:
- Kurt Scafe	kscafe@educaid.com
- Adele Marsh	amarsh@aessuccess.org
- Lori Shaffer	lori.shaffer@apollogrp.edu