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19. 20. 21. 22. 23. 24. ITEM NO. SCHEDULE OF SUPPLIES/SERVICES QUANTITY UNIT
UNIT PRICE AMOUNT 32a. QUANTITY IN COLUMN 21 HAS BEEN RECEIVED INSPECTED
ACCEPTED, AND CONFORMS TO THE CONTRACT, EXCEPT AS NOTED: 32b. SIGNATURE OF
AUTHORIZED GOVERNMENT 32c. DATE 32d. PRINTED NAME AND TITLE OF AUTHORIZED
GOVERNMENT REPRESENTATIVE REPRESENTATIVE 32e. MAILING ADDRESS OF AUTHORIZED
GOVERNMENT REPRESENTATIVE 32f. TELPHONE NUMBER OF AUTHORZED GOVERNMENT
REPRESENTATIVE 32g. E-MAIL OF AUTHORIZED GOVERNMENT REPRESENTATIVE 33. SHIP
NUMBER 34. VOUCHER NUMBER 35. AMOUNT VERIFIED 36. PAYMENT 37. CHECK NUMBER
CORRECT FOR COMPLETE PARTIAL FINAL PARTIAL FINAL 38. S/R ACCOUNT NO. 39. S/R
VOUCHER NUMBER 40. PAID BY 41a. I CERTIFY THIS ACCOUNT IS CORRECT AND PROPER FOR
PAYMENT 42a. RECEIVED BY (Print) 41b. SIGNATURE AND TITLE OF CERTIFYING OFFICER
41c. DATE 42b. RECEIVED AT (Location) 42c. DATE REC'D (YY/MM/DD) 42d. TOTAL
CONTAINERS STANDARD FORM 1449 (REV. 3/2005) BACK

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SCHEDULE Continued ITEM NO. SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE $ AMOUNT
$ Accounting and Appropriation Data:
0198M2009.A.2009.ENB00000.6P2.2572A.C26.000.0000.000000 Cost Applied:
$5,000,000.00 0001 IDIQ Base Ordering Period Award Minimum Guarantee 1.00 SE
5,000,000.00 5,000,000.00 Period of Performance: 06/17/2009 - 06/16/2014 0002
OPTION - Optional Ordering Period 0.00 EA 0.00 0.00 Optional Period of
Performance: 06/17/2014 - 06/16/2019 PAGE 2 OF

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A. ADDENDUM 1 – SF 1449 CONTINUATION PAGE (This page left blank intentionally.)
Solicitation Number: FSA-TitleIV-09 Page 1 of 20

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B. ADDENDUM 2 – 52.212-4, CONTRACT TERMS AND CONDITIONS— COMMERCIAL ITEMS (MAR
2009) B.1 52.212-4 Contract Terms And Conditions—Commercial Items (Mar 2009)—
TAILORED (c)(1) Changes. The Contracting Officer may at any time, by written
order, and without notice to the sureties, if any, make changes within the
general scope of this contract in any one or more of the following: (i)
Description of services to be performed. (ii) Time of performance (i.e., hours
of the day, days of the week, etc.). (iii) Place of performance of the services.
(2) If any such change causes an increase or decrease in the cost of, or the
time required for, performance of any part of the work under this contract,
whether or not changed by the order, the Contracting Officer shall make an
equitable adjustment in the contract price, the delivery schedule, or both, and
shall modify the contract. (3) The Contractor must assert its right to an
adjustment under this clause within 30 days from the date of receipt of the
written order. However, if the Contracting Officer decides that the facts
justify it, the Contracting Officer may receive and act upon a proposal
submitted before final payment of the contract. (4) If the Contractor’s proposal
includes the cost of property made obsolete or excess by the change, the
Contracting Officer shall have the right to prescribe the manner of the
disposition of the property. (5) Failure to agree to any adjustment shall be a
dispute under the Disputes clause. However, nothing in this clause shall excuse
the Contractor from proceeding with the contract as changed. B.2 52.252-2
Clauses Incorporated By Reference (Feb 1998) This contract incorporates one or
more clauses by reference, with the same force and effect as if they were given
in full text. Upon request, the Contracting Officer will make their full text
available. The full text of a clause may also be accessed electronically at:
http://www.arnet.gov/far/ • 52.203-13 Contractor Code of Business Ethics and
Conduct (Dec 2008) • 52.203-14 Display of Hotline Poster(s) (Dec 2007) •
52.209-6 Protecting the Government’s Interest when Subcontracting with
Contractors Debarred, Suspended, or Proposed for Debarment (SEP 2006) •
52.216-18 Ordering (OCT 1995) (a) the effective date of award, the end of the
current period of performance • 52.216-19 Ordering Limitations (OCT 1995) (a)
One Borrower (b)(1) Five Million Borrowers (b)(2) Five Million Borrowers (b)(3)
Two Days (d) One Day • 52.216-22 Indefinite Quantity (OCT 1995) Solicitation
Number: FSA-TitleIV-09 Page 2 of 20

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(d) the end of the current period of performance • 52.216-27 Single Or Multiple
Awards (OCT 1995) • 52.217-8 Option To Extend Services (NOV 1999) • 52.217-9
Option to Extend the Term of the Contract (MAR 2000) • 52.224-1 Privacy Act
Notification (APR 1984) • 52.224-2 Privacy Act (APR 1984) B.3 EDAR 3452.202-1
Definitions (Aug 1987) – TAILORED (a) The term "Secretary" or "Head of the
Agency" (also called "Agency Head") means the Secretary of the Department of
Education; and the term "his/her duly authorized representative" means any
person, persons, or board authorized to act for these officials. (b) “Chief
Acquisition Officer” or “CAO” means the official responsible for monitoring the
agency’s acquisition activities, evaluating them based on applicable performance
measurements, increasing the use of full and open competition in agency
acquisitions, making acquisition decisions consistent with applicable laws, and
establishing clear lines of authority, accountability, and responsibility for
acquisition decision-making and developing and maintaining a acquisition career
management program. (c) "Chief of the Contracting Office" means an official
serving in the contracting activity (CAM or FSA Acquisitions) as the manager of
a group that awards and administers contracts for a principal office of the
Department. See also definition of “Head of Contracting Activity” below. (d)
“Contracting Officer's Representative” or “COR” means a government employee
appointed in writing ONLY by a contracting officer and delegated limited
responsibilities to perform specified contract management duties related to
technical oversight and administration of a specific contract. CORs may serve in
a full-time or part-time capacity. The COR performs the contract management
duties assigned by the CO in a written "Contracting Officer's Representative
Designation Memorandum" for each particular contract. Multiple CORs may be
appointed for a single contract when the area of expertise necessary requires
such appointments. The CO may appoint alternate or assistant CORs to serve in
the COR's absence. For the purpose of this program, the term Contracting
Officer's Technical Representative (COTR) will be used for assistant CORs. (e)
“Head of the Contracting Activity” or “HCA” means those officials within the
Department of Education who have responsibility for and manage an acquisition
organization and usually hold unlimited procurement authority. The Director,
Federal Student Aid Acquisitions, is the HCA for FSA. The Director, Contracts
and Acquisitions Management (CAM) is the HCA for all other Departmental program
offices and all boards, commissions, and councils under the management control
of the Department. (f) “Performance-Based Organization” or “PBO” is the office
within the Department that is mandated by Public Law 105-244 to carry out
Federal student assistance or aid programs and report to Congress on an annual
basis. It may also be referred to as “Federal Student Aid.” (g) “Senior
Procurement Executive” or “SPE” means the single agency official appointed as
such by the head of the agency and delegated broad responsibility for
acquisition functions, including issuing agency acquisition policy and reporting
on acquisitions agency-wide. The SPE also acts as the official one level above
the contracting officer when the HCA is acting as a contracting officer. (h)
"Department" or "ED" means the United States Department of Education.
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B.4 ED 307-17 Conflicts Of Interest (Aug 2007) (a) The contractor,
subcontractor, employee or consultant, has certified that, to the best of their
knowledge and belief, there are no relevant facts or circumstances which could
give rise to an organizational or personal conflict of interest, (see FAR
Subpart 9.5 for organizational conflicts of interest), (or apparent conflict of
interest) for the organization or any of its staff, and that the contractor,
subcontractor, employee or consultant has disclosed all such relevant
information if such a conflict of interest appears to exist to a reasonable
person with knowledge of the relevant facts (or if such a person would question
the impartiality of the contractor, subcontractor, employee or consultant).
Conflicts may arise in the following situations: (1) Unequal access to
information – a potential contractor, subcontractor, employee or consultant has
access to non-public information through its performance on a government
contract. (2) Biased ground rules – a potential contractor, subcontractor,
employee or consultant has worked, in one government contract, or program, on
the basic structure or ground rules of another government contract, (3) Impaired
objectivity – a potential contractor, subcontractor, employee or consultant, or
member of their immediate family (spouse, parent or child) has financial or
other interests that would impair, or give the appearance of impairing,
impartial judgment in the evaluation of government programs, in offering advice
or recommendations to the government, or in providing technical assistance or
other services to recipients of Federal funds as part of its contractual
responsibility. "Impaired objectivity" includes but is not limited to the
following situations that would cause a reasonable person with knowledge of the
relevant facts to question a person's objectivity: (i) financial interests or
reasonably foreseeable financial interests in or in connection with products,
property, or services that may be purchased by an educational agency, a person,
organization, or institution in the course of implementing any program
administered by the Department; (ii) significant connections to teaching
methodologies that might require or encourage the use of specific products,
property or services; or (iii)significant identification with pedagogical or
philosophical viewpoints that might require or encourage the use of a specific
curriculum, specific products, property or services, Offerors must provide the
disclosure described above on any actual or potential conflict (or apparent
conflict of interest) of interest regardless of their opinion that such a
conflict or potential conflict (or apparent conflict of interest) would not
impair their objectivity. In a case in which an actual or potential conflict (or
apparent conflict of interest) is disclosed, the Department will take
appropriate actions to eliminate or address the actual or potential conflict (or
apparent conflict of interest), including but not limited to mitigating or
neutralizing the conflict, when appropriate, through such means as ensuring a
balance of views, disclosure with the appropriate disclaimers, or by restricting
or modifying the work to be performed to avoid or reduce the conflict. In this
clause, the term “potential conflict” means reasonably foreseeable conflict of
interest. Solicitation Number: FSA-TitleIV-09 Page 4 of 20

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(b) The contractor, subcontractor, employee or consultant agrees that if
“impaired objectivity, or an actual or potential conflict of interest (or
apparent conflict of interest) is discovered after the award is made, it will
make a full disclosure in writing to the Contracting Officer. This disclosure
shall include a description of actions that the Contractor has taken or proposes
to take, after consultation with the Contracting Officer, to avoid, mitigate, or
neutralize the actual or potential conflict (or apparent conflict of interest).
(c) Remedies - The Government may terminate this contract for convenience, in
whole or in part, if it deems such termination necessary to avoid the appearance
of a conflict of interest. If the Contractor was aware of a potential conflict
of interest prior to award or discovered an actual or potential conflict (or
apparent conflict of interest) after award and did not disclose or
misrepresented relevant information to the Contracting Officer, the Government
may terminate the contract for default, or pursue such other remedies as may be
permitted by law or this contract. These remedies include imprisonment for up to
five years for violation of Title 18, U.S. Code, § 1001 and fines of up to $5000
for violation of Title 31, U.S. Code, § 3802. Further remedies include
suspension or debarment from contracting with the federal government. The
Contractor may also be required to reimburse the Department for costs the
Department incurs arising from activities related to conflicts of interest. An
example of such costs would be those incurred in processing Freedom of
Information Act requests related to a conflict of interest. (d) In cases where
remedies short of termination have been applied, the contractor, subcontractor,
employee or consultant agrees to eliminate the organizational conflict of
interest, or mitigate it to the satisfaction of the Contracting Officer. (e) The
Contractor further agrees to insert in any subcontract or consultant agreement
hereunder, provisions which shall conform substantially to the language of this
clause, including specific mention of potential remedies and this paragraph (e).
B.5 EDAR 3452.208-70 Printing (Aug 1987) Unless otherwise specified in this
contract, the contractor shall not engage in, nor subcontract for, and printing
(as that term is defined in Title I of the Government Printing and Binding
Regulations in effect on the effective date of this contract) in connection with
the performance of work under this contract; except that performance involving
the reproduction of less than 5,000 production units of any one page, or less
than 25,000 production units in the aggregate of multiple pages, shall not be
deemed to be printing. A production unit is defined as one sheet, size 8 1/2 by
11 inches, and one side and color only. B.6 FSA 24-1 Release Of Information
Under The Freedom Of Information Act (Jan 2008)—TAILORED By entering into a
contract with the Department of Education and as permitted/authorized by
existing statutes and applicable case law, without regard to proprietary
markings, the contractor approves the release of the entire contract and all
related modifications and task orders, including, but not limited to: (1) Unit
prices, including labor rates, (2) Statements of Work/Performance Work Statement
generated by the contractor, (3) Performance requirements, including incentives,
performance standards, quality levels and service level agreements, Solicitation
Number: FSA-TitleIV-09 Page 5 of 20

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(4) Reports, deliverables and work products delivered in performance of the
contract (including quality of service, performance against
requirements/standards/service level agreements), (5) Any and all information,
data, software and related documentation first provided under the contract, (6)
Proposals or portions of proposals incorporated by reference, and (7) Other
terms and conditions. B.7 FSA 27-1 Labeling Of Documents (June 2007)—TAILORED
The Contractor shall not label any data, as defined in the clause at 52.227-14,
produced in performance of this contract in a way that would restrict the
Government's right to use or release the information. If applicable, the
Contractor shall include a legend that identifies sensitive data that should not
be released for security reasons. Under FAR 52.227-14, Rights in Data-General
(or 52.227-15, -16, -17) clause, this data may be used for any public purpose.
Deliverables shall not contain vendor-specific logos, mottos, watermarks, or
holograms. The Contractor shall not use, particularly for proposals, U.S.
Government logos, such as the U.S. Department of Education or Federal Student
Aid. B.8 FSA 27-2 Limitations On The Use Or Disclosure Of Government-Furnished
Information Marked With Restrictive Legends (Dec 2006) (a) For contracts under
which data are to be produced, furnished, or acquired, the terms “limited
rights” and “restricted rights” are defined in the Rights in Data - General
clause of this contract. (b) Proprietary data, technical data or computer
software provided to the Contractor as Government furnished information (GFI)
under this contract may be subject to restrictions on use, modification,
reproduction, release, performance, display, or further disclosure. (1)
Proprietary data with legends that serve to restrict disclosure or use of data.
The Contractor shall use, modify, reproduce, perform, or display proprietary
data received from the Government with proprietary or restrictive legends only
in the performance of this contract. The Contractor shall not, without the
express written permission of the party who owns the data, release or disclose
such data or software to any person. (2) GFI marked with limited or restricted
rights legends. The Contractor shall use, modify, reproduce, perform, or display
technical data received from the Government with limited rights legends or
computer software received with restricted rights legends only in the
performance of this contract. The Contractor shall not, without the express
written permission of the party whose name appears in the legend, release or
disclose such data or software to any person. (3) GFI marked with specially
negotiated license rights legends. The Contractor shall use, modify, reproduce,
release, perform, or display proprietary data, technical data or computer
software received from the Government with specially negotiated license legends
only as permitted in the license. Such data or software may not be released or
disclosed to other persons unless permitted by the license and, prior to release
or disclosure, the intended recipient has completed the use and non-disclosure
agreement. The Contractor shall modify paragraph (1)(c) of the use and
non-disclosure agreement to reflect the recipient's obligations regarding use,
modification, reproduction, release, Solicitation Number: FSA-TitleIV-09 Page 6
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(1) Name and Address of the Contractor. (2) Invoice Number and Invoice Date
(Date invoices as close as possible to the date of mailing or transmission. The
date and actual submission must occur after receipt, inspection and acceptance
of the supplies or services.) (3) The Contract number, contract line item, and
if applicable, the order number must be included on the invoice and be correct.
(4) Description, quantity, unit of measure, unit price, and extended price of
the item delivered must agree with the contract or order. (5) Terms of any
prompt payment discount offered. (6) Name, title, and phone number of persons to
be notified in event of defective invoice. (7) The period of time covered by the
invoice must include the first and last day of the period. (8) Totals must be
supported by subtotals and subtotals should be supported by detail, (i.e.
documentation for categories of labor, hours performed, unit prices) and
deliverables provided. (9) If required by this contract or order, receipts must
be provided to support documentation of "other direct costs" (ODCs) or
materials. B.12 AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 (Pub.L. 111-5) In
the event funds are utilized on this contract originating from the American
Recovery and Reinvestment Act of 2009, or other discrete legislation, the
following clauses, or similar clauses, shall apply: • 52.203-15 Whistleblower
Protections Under The American Recovery And Reinvestment Act Of 2009 (Mar 2009)
• 52.204-11 American Recovery And Reinvestment Act—Reporting Requirements (Mar
2009) • 52.212-5 Contract Terms and Conditions Required to Implement Statutes or
Executive Orders—Commercial Items (Mar 2009)—Alternate II (Mar 2009) • 52.215-2
Audit And Records—Negotiation—Alternate I (Mar 2009) • EDAR 3403-1 Self
Reporting Of Violations – Recovery Act (Feb 2009) The contractor and
subcontractor shall promptly refer to an appropriate inspector general any
credible evidence that a principal, employee, agent, contractor, sub-grantee or
subcontractor has committed a violation of Federal criminal law involving fraud,
conflict of interest, bribery, or gratuity violations found in Title 18 U.S.C.
or a violation of the civil False Claims Act (31 U.S.C. 3729-3733). B.13
ADDITIONAL TERMS AND CONDITIONS A. Contract Type—Indefinite Delivery/Indefinite
Quantity (IDIQ). During the course of the basic ordering period, the Government
will provide a minimum of $5,000,000.00 in revenue, provided that the contractor
is in compliance with the requirements for servicing federally held debt, and
the maximum volume for the basic ordering period agreement will be 50 million
borrowers. The Optional Ordering Period will have a minimum of $0 and a maximum
of an additional 50 million borrowers B. Ordering Period—The ordering period for
this contract will be one (1), five (5) year Base Ordering Period, with one (1)
additional five (5) year Optional Ordering Period. Solicitation Number:
FSA-TitleIV-09 Page 10 of 20

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C. Requirements Deadlines—The contractor shall comply with the following
compliance requirements deadlines: (1) The contractor shall meet the Initial
Requirements by August 31, 2009 for servicing federally held debt. If these are
met, FFEL servicing may begin. (2) The contractor shall meet the Intermediate
Requirements by March 31, 2010 (unless otherwise noted within the Intermediate
Requirements document), for servicing federally held debt. If all requirements
are not met, the Government may elect to not assign further volume to the
contractor. Furthermore, the Government may transfer currently held accounts to
another servicer. The contractor losing the accounts shall bear the costs of any
such transfer. (3) The contractor shall meet the Full Requirements by August 31,
2010 for Direct Loan servicing. If the Government determines the requirements
are not met, the Government may elect to not assign further volume to the
contractor. Furthermore, the Government may transfer currently held accounts to
another servicer. The contractor losing the accounts shall bear the costs for
any such transfer. D. Quarterly Compliance Monitoring—[Reserved] E. Annual
Compliance Audit—[Reserved] F. Allocation Methodology—See Attachments A-4 and
A-5. G. Allocation Metrics— See Attachments A-4 and A-5. H. Performance
Incentives/Metrics—[Reserved] I. Price Definitions—See Attachment A-6. J. Work
Performed Outside the Continental United States—The Contractor has represented
to the Department that it will perform all work required under this Contract
within the United States. If, at any time, the Contractor wishes to perform any
Contract work outside the United States, the Contractor shall inform the
Contracting Officer, in advance and in writing, of its intention and request the
Department’s approval. The Contractor shall not perform any Contract work
outside the United States unless and until it has received the Contracting
Officer’s explicit, written approval to perform such work. In order to give
proper consideration to the Contractor’s request, the Department may ask for,
and the Contractor shall provide, information relevant to the proposed
performance outside the United States, including but not limited to a detailed
description of the physical, personnel and management resources to be used and
any potential difficulties or constraints in performing in the foreign
jurisdiction. The Department may refuse to approve Contract performance outside
the United States to the extent that, solely in the Department’s judgment, the
Contractor has not shown that performance outside the United States would
satisfy the Contract requirements and would not impair or degrade performance.
Further, the Department may refuse to approve any performance outside the United
States for any other reason, or for no reason, except as otherwise required by
the laws and treaties of the United States. The Department also may approve
performance outside the United States subject to certain conditions, to which
conditions the Contractor shall strictly adhere. Neither performance within the
United States, nor the Department’s refusal to allow performance outside the
United States shall ever constitute a change to this Contract or give rise to
any entitlement to additional compensation or excuse any failure of performance
by the Contractor. Nothing in this clause shall be interpreted to impose any
obligation on the Department to allow or to refuse a request for performance of
this Contract outside the United States. Solicitation Number: FSA-TitleIV-09
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K. Branding/Marketing Material—Contractors may not solicit or promote other
services/products they, or their affiliates, offer while servicing Department of
Education borrowers, or Federally held debt. This includes all communication
channels and touch points, such as but not limited to: inbound and outbound
calls/email, web pages, any mailings specific to the status of their account,
direct personal and automated interaction, etc. Scenarios: (1) if the servicer
services Federally and non-Federally held debt and offers combined billing, no
marketing envelopes or inserts for other services/products may be issued; (2) if
the servicer services Federally and non-Federally held debt and does NOT use
combined billing, normal marketing may be provided for non- Federally held debt
for other services/products; and (3) if the servicer services Federally and
non-Federally held debt and is in personal contact, no marketing for other
services/products may be discussed. If a borrower with in-school status seeks
information regarding other products or services from the servicer, the borrower
shall be directed to their school’s Student Financial Assistance Office. Any
exception or ambiguity regarding the above shall be reviewed and approved by the
Contracting Officer in advance. L. Invoicing and Non-Compliance – Borrowers
whose loans are not being serviced in compliance with the Requirements, Policy
and Procedures for servicing federally held debt due to the fault of the
servicer (i.e. correct interest calculations, correct balances, interest
determination and calculations, notices sent properly, proper due diligence,
etc.), will not be billable to the Government from the initial point of
non-compliance. Any funds that have been invoiced for these borrowers and paid
shall be returned to the Government via a credit on the next invoice. M.
Contracting Officer’s Representative – The following individual is designated as
Contracting Officer’s Representative (COR) for this contract: Mr. James McMahon
Federal Student Aid 830 First Street, NE Suite 111G5 Washington, DC 20202 Email:
james.mcmahon@ed.gov Phone: (202) 377-3124 N. Additional Terms: 1. The Title IV
Servicing contracts are for any potential services to manage all types of Title
IV student aid obligations, including, but not limited to, servicing and
consolidation of outstanding debt. However, they are not Requirements contracts.
2. Each contractor will provide, at a minimum, the services provided within
their proposal, in accordance with the pricing identified in Term #3 below. 3.
The Government will set and manage the common pricing, including tier structure,
below: Solicitation Number: FSA-TitleIV-09 Page 12 of 20

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Status Volume Low Volume High Unit Price Borrowers in In-school Status N/A N/A $
1.050 Borrowers in Grace or Current Repayment Status 1 3,000,000 $ 2.110
3,000,001 UP $ 1.900 Borrowers in Deferment or Forbearance 1 1,600,000 $ 2.070
1,600,001 UP $ 1.730 Borrowers 31-90 Days Delinquent N/A N/A $ 1.620 Borrowers
91-150 Days Delinquent N/A N/A $ 1.500 Borrowers 151-270 Days Delinquent N/A N/A
$ 1.370 Borrowers 270+ Days Delinquent N/A N/A $ 0.500 Out year pricing will
follow the methodology described utilizing the subsequent terms. There will be
no set declination in pricing at the time of award. 4. The Government has
included an escalation methodology based upon the Bureau of Labor Statistics’
(BLS) Employment Cost Index (ECI) for Total Compensation, Private Industry,
Service Occupations (Not Seasonally Adjusted), to account for significant
inflation and/or deflation. When the ECI exceeds 3.0% (plus or minus) in any
given year the Government will adjust the established common pricing by any
amount in excess of this rate. The calculated rate of escalation will equal the
average of the 12-month percent change for the previous four quarters, ending
June 30th. This ECI escalation will be applied beginning in September of the
same calendar year. Further, this escalation will compound for all remaining
years of the Base and Optional Ordering Periods. For example, ECI rate released
in June 2010 is 3.6%. The Government will increase unit pricing by .6% for the
contract beginning September 1, 2010 and all remaining years of the Base
Ordering Period, as well as the Optional Ordering Period. A decreasing rate of
inflation would follow the same pattern as above. For example, if the ECI
decreases by more than 3.0%, then the unit prices for the remaining out-years
will also decrease by the percentage in excess of 3.0%. For example, ECI rate
released in June 2010 is -4.2%. The Government will decrease unit pricing by
1.2% for the contract period beginning September 1, 2010 and all remaining years
of the Base Ordering Period, as well as the Optional Ordering Period. 5. Common
pricing includes all supplies, services and other costs to deliver Title IV
servicing under this contract, including: • Costs for bringing contractor
systems into compliance for handling federally held debt. • Costs for
legislative, regulatory or policy changes that affect the FFEL community as a
whole, as is commercially accepted practice in the FFEL community. • For all
other costs, the Department and the contractor(s) may come to an agreement via
change order process or negotiation, as necessary. 6. The Government makes no
guarantee to any contractor that their organization will retain their current
loan servicing volume. In addition, the Government makes no minimum Solicitation
Number: FSA-TitleIV-09 Page 13 of 20

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volume guarantees to any contractor. The Government does guarantee a minimum
dollar/revenue amount of $5,000,000 over the base ordering period under this
Indefinite Delivery, Indefinite Quantity contract, regardless of the number of
loans serviced by a contractor. 7. The Government reserves the right to
periodically review and equitably adjust the rate structure to maintain
effectiveness of the services provided (i.e., different volume breaks, different
ties, cost allocations, etc) 8. The Government reserves the right to equitably
introduce, eliminate, or modify loan deliverables/status items that are in the
best interest of the Government or Borrower. (i.e., in-school deferments moved
into the In-School deliverable; new deferment or forbearance categories; etc).
9. The Government reserves the right to unilaterally shift borrowers in the best
interest of the Government or Borrowers, at no additional cost to the
Government. It is anticipated that this will be done only with reasonable and
prudent cause. 10. The Government retains the unilateral right to resolve
split-borrowers as deemed appropriate by the Government, at no additional cost
to the Government. Solicitation Number: FSA-TitleIV-09 Page 14 of 20

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B.14 52.212-5 Contract Terms And Conditions Required To Implement Statutes Or
Executive Orders—Commercial Items (Dec 2008) (a) The Contractor shall comply
with the following Federal Acquisition Regulation (FAR) clauses, which are
incorporated in this contract by reference, to implement provisions of law or
Executive orders applicable to acquisitions of commercial items: (1) 52.233-3,
Protest After Award (Aug 1996) (31 U.S.C. 3553). (2) 52.233-4, Applicable Law
for Breach of Contract Claim (Oct 2004) (Pub. L. 108-77, 108- 78) (b) The
Contractor shall comply with the FAR clauses in this paragraph (b) that the
Contracting Officer has indicated as being incorporated in this contract by
reference to implement provisions of law or Executive orders applicable to
acquisitions of commercial items: _X (1) 52.203-6, Restrictions on Subcontractor
Sales to the Government (Sept 2006), with Alternate I (Oct 1995) (41 U.S.C. 253g
and 10 U.S.C. 2402). _X (2) 52.203-13, Contractor Code of Business Ethics and
Conduct (Dec 2008) (Pub. L. 110 252, Title VI, Chapter 1 (41 U.S.C. 251 note)).
__ (3) 52.219-3, Notice of Total HUBZone Set-Aside (Jan 1999) (15 U.S.C. 657a).
__ (4) 52.219-4, Notice of Price Evaluation Preference for HUBZone Small
Business Concerns (July 2005) (if the offeror elects to waive the preference, it
shall so indicate in its offer) (15 U.S.C. 657a). __ (5) [Reserved] __ (6)(i)
52.219-6, Notice of Total Small Business Set-Aside (June 2003) (15 U.S.C. 644).
__ (ii) Alternate I (Oct 1995) of 52.219-6. __ (iii) Alternate II (Mar 2004) of
52.219-6. __ (7)(i) 52.219-7, Notice of Partial Small Business Set-Aside (June
2003) (15 U.S.C. 644). __ (ii) Alternate I (Oct 1995) of 52.219-7. __ (iii)
Alternate II (Mar 2004) of 52.219-7. _X (8) 52.219-8, Utilization of Small
Business Concerns (May 2004) (15 U.S.C. 637(d)(2) and (3)). _X (9)(i) 52.219-9,
Small Business Subcontracting Plan (Apr 2008) (15 U.S.C. 637(d)(4)). __ (ii)
Alternate I (Oct 2001) of 52.219-9. _X (iii) Alternate II (Oct 2001) of
52.219-9. __ (10) 52.219-14, Limitations on Subcontracting (Dec 1996) (15 U.S.C.
637(a)(14)). __ (11) 52.219-16, Liquidated Damages—Subcontracting Plan (Jan
1999) (15 U.S.C. 637(d)(4)(F)(i)). __ (12) (i) 52.219-23, Notice of Price
Evaluation Adjustment for Small Disadvantaged Business Concerns (Oct 2008) (10
U.S.C. 2323) (if the offeror elects to waive the adjustment, it shall so
indicate in its offer). __ (ii) Alternate I (June 2003) of 52.219-23. __ (13)
52.219-25, Small Disadvantaged Business Participation Program—Disadvantaged
Status and Reporting (Apr 2008) (Pub. L. 103-355, section 7102, and 10 U.S.C.
2323). __ (14) 52.219-26, Small Disadvantaged Business Participation Program—
Incentive Subcontracting (Oct 2000) (Pub. L. 103-355, section 7102, and 10
U.S.C. 2323). __ (15) 52.219-27, Notice of Total Service-Disabled Veteran-Owned
Small Business Set-Aside (May 2004) (15 U.S.C. 657 f). Solicitation Number:
FSA-TitleIV-09 Page 15 of 20

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__ (16) 52.219-28, Post Award Small Business Program Rerepresentation (June
2007) (15 U.S.C. 632(a)(2)). _X (17) 52.222-3, Convict Labor (June 2003) (E.O.
11755). _X (18) 52.222-19, Child Labor—Cooperation with Authorities and Remedies
(Feb 2008) (E.O. 13126). _X (19) 52.222-21, Prohibition of Segregated Facilities
(Feb 1999). _X (20) 52.222-26, Equal Opportunity (Mar 2007) (E.O. 11246). _X
(21) 52.222-35, Equal Opportunity for Special Disabled Veterans, Veterans of the
Vietnam Era, and Other Eligible Veterans (Sept 2006) (38 U.S.C. 4212). _X (22)
52.222-36, Affirmative Action for Workers with Disabilities (Jun 1998) (29
U.S.C. 793). _X (23) 52.222-37, Employment Reports on Special Disabled Veterans,
Veterans of the Vietnam Era, and Other Eligible Veterans (Sept 2006) (38 U.S.C.
4212). _X (24) 52.222-39, Notification of Employee Rights Concerning Payment of
Union Dues or Fees (Dec 2004) (E.O. 13201). _X (25) (i) 52.222-50, Combating
Trafficking in Persons (Aug 2007) (Applies to all contracts). __ (ii) Alternate
I (Aug 2007) of 52.222-50. __ (26) (i) 52.223-9, Estimate of Percentage of
Recovered Material Content for EPA- Designated Items (May 2008) (42 U.S.C.
6962(c)(3)(A)(ii)). __ (ii) Alternate I (May 2008) of 52.223-9 (42 U.S.C.
6962(i)(2)(C)). __ (27) 52.223-15, Energy Efficiency in Energy-Consuming
Products (Dec 2007) (42 U.S.C. 8259b). __ (28) (i) 52.223-16, IEEE 1680 Standard
for the Environmental Assessment of Personal Computer Products (Dec 2007) (E.O.
13423). __ (ii) Alternate I (Dec 2007) of 52.223-16. __ (29) 52.225-1, Buy
American Act—Supplies (June 2003) (41 U.S.C. 10a-10d). __ (30) (i) 52.225-3, Buy
American Act—Free Trade Agreements—Israeli Trade Act (Aug 2007) (41 U.S.C.
10a-10d, 19 U.S.C. 3301 note, 19 U.S.C. 2112 note, Pub. L 108- 77, 108-78,
108-286, 109-53 and 109-169). __ (ii) Alternate I (Jan 2004) of 52.225-3. __
(iii) Alternate II (Jan 2004) of 52.225-3. __ (31) 52.225-5, Trade Agreements
(Nov 2007) (19 U.S.C. 2501, et seq., 19 U.S.C. 3301 note). _X (32) 52.225-13,
Restrictions on Certain Foreign Purchases (June 2008) (E.O.’s, proclamations,
and statutes administered by the Office of Foreign Assets Control of the
Department of the Treasury). __ (33) 52.226-4, Notice of Disaster or Emergency
Area Set-Aside (Nov 2007) (42 U.S.C. 5150). __ (34) 52.226-5, Restrictions on
Subcontracting Outside Disaster or Emergency Area (Nov 2007) (42 U.S.C. 5150).
__ (35) 52.232-29, Terms for Financing of Purchases of Commercial Items (Feb
2002) (41 U.S.C. 255(f), 10 U.S.C. 2307(f)). __ (36) 52.232-30, Installment
Payments for Commercial Items (Oct 1995) (41 U.S.C. 255(f), 10 U.S.C. 2307(f)).
_X (37) 52.232-33, Payment by Electronic Funds Transfer—Central Contractor
Registration (Oct 2003) (31 U.S.C. 3332). Solicitation Number: FSA-TitleIV-09
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__ (38) 52.232-34, Payment by Electronic Funds Transfer—Other than Central
Contractor Registration (May 1999) (31 U.S.C. 3332). __ (39) 52.232-36, Payment
by Third Party (May 1999) (31 U.S.C. 3332). _X (40) 52.239-1, Privacy or
Security Safeguards (Aug 1996) (5 U.S.C. 552a). __ (41) (i) 52.247-64,
Preference for Privately Owned U.S.-Flag Commercial Vessels (Feb 2006) (46
U.S.C. Appx. 1241(b) and 10 U.S.C. 2631). __ (ii) Alternate I (Apr 2003) of
52.247-64. (c) The Contractor shall comply with the FAR clauses in this
paragraph (c), applicable to commercial services, that the Contracting Officer
has indicated as being incorporated in this contract by reference to implement
provisions of law or Executive orders applicable to acquisitions of commercial
items: _X (1) 52.222-41, Service Contract Act of 1965 (Nov 2007) (41 U.S.C. 351,
et seq.). _X (2) 52.222-42, Statement of Equivalent Rates for Federal Hires (May
1989) (29 U.S.C. 206 and 41 U.S.C. 351, et seq.). _X (3) 52.222-43, Fair Labor
Standards Act and Service Contract Act—Price Adjustment (Multiple Year and
Option Contracts) (Nov 2006) (29 U.S.C. 206 and 41 U.S.C. 351, et seq.). __ (4)
52.222-44, Fair Labor Standards Act and Service Contract Act—Price Adjustment
(Feb 2002) (29 U.S.C. 206 and 41 U.S.C. 351, et seq.). __ (5) 52.222-51,
Exemption from Application of the Service Contract Act to Contracts for
Maintenance, Calibration, or Repair of Certain Equipment—Requirements (Nov 2007)
(41 U.S.C. 351, et seq.). __ (6) 52.222-53, Exemption from Application of the
Service Contract Act to Contracts for Certain Services—Requirements (Nov 2007)
(41 U.S.C. 351, et seq.). __ (7) 52.237-11, Accepting and Dispensing of $1 Coin
(Sept 2008) (31 U.S.C. 5112(p)(1)). (d) Comptroller General Examination of
Record. The Contractor shall comply with the provisions of this paragraph (d) if
this contract was awarded using other than sealed bid, is in excess of the
simplified acquisition threshold, and does not contain the clause at 52.215-2,
Audit and Records—Negotiation. (1) The Comptroller General of the United States,
or an authorized representative of the Comptroller General, shall have access to
and right to examine any of the Contractor’s directly pertinent records
involving transactions related to this contract. (2) The Contractor shall make
available at its offices at all reasonable times the records, materials, and
other evidence for examination, audit, or reproduction, until 3 years after
final payment under this contract or for any shorter period specified in FAR
Subpart 4.7, Contractor Records Retention, of the other clauses of this
contract. If this contract is completely or partially terminated, the records
relating to the work terminated shall be made available for 3 years after any
resulting final termination settlement. Records relating to appeals under the
disputes clause or to litigation or the settlement of claims arising under or
relating to this contract shall be made available until such appeals,
litigation, or claims are finally resolved. (3) As used in this clause, records
include books, documents, accounting procedures and practices, and other data,
regardless of type and regardless of form. This does not require Solicitation
Number: FSA-TitleIV-09 Page 17 of 20

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the Contractor to create or maintain any record that the Contractor does not
maintain in the ordinary course of business or pursuant to a provision of law.
(e) (1) Notwithstanding the requirements of the clauses in paragraphs (a), (b),
(c), and (d) of this clause, the Contractor is not required to flow down any FAR
clause, other than those in paragraphs (e)(1)(i) through (xi) of this paragraph
in a subcontract for commercial items. Unless otherwise indicated below, the
extent of the flow down shall be as required by the clause— (i) 52.203-13,
Contractor Code of Business Ethics and Conduct (Dec 2008) (Pub. L. 110-252,
Title VI, Chapter 1 (41 U.S.C. 251 note)). (ii) 52.219-8, Utilization of Small
Business Concerns (May 2004) (15 U.S.C. 637(d)(2) and (3)), in all subcontracts
that offer further subcontracting opportunities. If the subcontract (except
subcontracts to small business concerns) exceeds $550,000 ($1,000,000 for
construction of any public facility), the subcontractor must include 52.219-8 in
lower tier subcontracts that offer subcontracting opportunities. (iii)
52.222-26, Equal Opportunity (Mar 2007) (E.O. 11246). (iv) 52.222-35, Equal
Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and
Other Eligible Veterans (Sept 2006) (38 U.S.C. 4212). (v) 52.222-36, Affirmative
Action for Workers with Disabilities (June 1998) (29 U.S.C. 793). (vi)
52.222-39, Notification of Employee Rights Concerning Payment of Union Dues or
Fees (Dec 2004) (E.O. 13201). (vii) 52.222-41, Service Contract Act of 1965 (Nov
2007) (41 U.S.C. 351, et seq.). (viii) 52.222-50, Combating Trafficking in
Persons (Aug 2007) (22 U.S.C. 7104(g)). Flow down required in accordance with
paragraph (f) of FAR clause 52.222-50. (ix) 52.222-51, Exemption from
Application of the Service Contract Act to Contracts for Maintenance,
Calibration, or Repair of Certain Equipment-Requirements (Nov 2007) (41 U.S.C.
351, et seq.). (x) 52.222-53, Exemption from Application of the Service Contract
Act to Contracts for Certain Services-Requirements (Nov 2007) (41 U.S.C. 351, et
seq.). (xi) 52.247-64, Preference for Privately Owned U.S.-Flag Commercial
Vessels (Feb 2006) (46 U.S.C. Appx. 1241(b) and 10 U.S.C. 2631). Flow down
required in accordance with paragraph (d) of FAR clause 52.247-64. (2) While not
required, the contractor may include in its subcontracts for commercial items a
minimal number of additional clauses necessary to satisfy its contractual
obligations. Solicitation Number: FSA-TitleIV-09 Page 18 of 20

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C. STATEMENT OF OBJECTIVES (SOO) C.1 General Description Of Scope/Purpose C.1.1
Federal Student Aid Background/Overview Federal Student Aid (FSA), an office of
the Department, plays a central and essential role in America's postsecondary
education community. FSA's core mission is to ensure that all eligible
individuals benefit from federal financial assistance—grants, loans and
work-study programs—for education beyond high school. The programs FSA
administers comprises the nation's largest source of student aid: during the
2007-08 school year alone, FSA provided approximately $83 billion in new aid to
nearly 10 million postsecondary students and their families. FSA’s staff of
1,100 is based in 10 cities, in addition to its Washington, D.C. headquarters.
C.1.2 Current Need With the current economic and liquidity uncertainty facing
financial markets, many student loan lenders are dropping out of the market.
With more than $65 billion in 2008- 09 loans and approximately $130 billion in
eligible 2003-07 student loans on bank balance sheets and auction rate
securitizations, the capital markets are currently unable to generate adequate
funds at prices that will ensure 2009-10 loans can be made. Recent legislation
including the College Cost Reduction Authorization Act of 2008 (CCRAA) (Pub. Law
110-84) and the Ensuring Continued Access to Student Loans Act of 2008 (ECASLA)
(Pub. Law 110-227) enabled the Department to accept former Federal Family
Education Loan Program (FFELP) loans in the form of additional Direct Loan (DL)
capacity, and to purchase FFELP loans as far back as 2003, in an effort to bring
liquidity and stability back to the student loan market. With the sudden
increase in current and potential loan volume that the Department will be
responsible for servicing, the need for increasing the Title IV student aid
servicing vehicles is determined appropriate at this time. C.1.3 Objective
Acquire efficient and effective commercial contract services to manage all types
of Title IV student aid obligations, including, but not limited to, servicing
and consolidation of outstanding debt. C.1.4 Constraints C.1.4.1 Specific
compliance activities for servicing Federally held assets include, but are not
limited to, Attachments A-1 through A-3 provided herein. C.1.4.2 In order to
manage the costs associated with such a potentially large portfolio, the service
must provide innovative measures to ensure portfolio growth is not the key
driver of total cost. Contractor incentives must be based on performing assets,
rather than transaction or activity based delinquency incentives. Costs may also
be managed through redistribution of customers to self-service options, as
approved by the Government. Performance measures will help ensure that the
complete service operates as efficiently and effectively as possible and that it
is achieving the desired Solicitation Number: FSA-TitleIV-09 Page 19 of 20

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business outcomes. These measurements will be flexible to allow for regular
reviews and revisions as necessary. C.1.4.3 The contractor(s) will be
responsible for maintaining a full understanding of all federal and state laws
and regulations and FSA requirements and ensuring that all aspects of the
service continue to remain in compliance as changes occur. C.1.4.4 The
contractor(s) will provide a service flexible enough to handle new requirements
generated by Congress and respond to legislative mandates and policy changes.
Please see Appendix A – Standards and Relevant Documents for historical and
current representative information. C.1.4.5 The contractor(s) will provide
timely (as defined by FSA and contractor) responses to Office of Inspector
General (OIG), General Accounting Office (GAO), budget, data, and management
requests. C.1.4.6 It is understood and mutually agreed that the Department of
Education has exclusive ownership of all information stored in, retrieved,
modified, and/or archived in as part of this service. The contractor shall have
no rights in such information and no rights to such information shall vest on
the contractor by virtue of its performance of this contract. No other party has
the right to copy, delete, archive, or transfer such information without the
prior express written consent of the Department of Education. The contractor
shall not use such information for any marketing or solicitation purpose
including, but not limited to, commercial advertising, credit offers, or similar
campaigns. C.2 Attachments/Supplemental Documents Number Title A-1 Additional
Servicer—Initial Requirements Document (Version 21.0) A-2 Additional
Servicer—Intermediate Requirements Document (Version 6.0) A-3 Additional
Servicer—Full Requirements Document (Version 6.0) A-4 Ongoing Allocation
Methodology A-5 Sample—Ongoing Allocation Metric Calculation A-6 Servicing
Pricing Definitions (Version 9.0) Solicitation Number: FSA-TitleIV-09 Page 20 of
20

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Attachment A-1 Additional Servicer INITIAL Requirements All_InitialReq_v21.0.doc
All_InitialReq_v21.0 1

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Attachment A-1 Additional Servicer – Initial Requirements Required by 8/31/09
unless otherwise noted TABLE OF CONTENTS General Statement
.................................................................................................................
3 Financial Reporting
................................................................................................................
3 Treasury
......................................................................................................................................
5 Transaction Management
....................................................................................................
6 Internal Controls
......................................................................................................................
7 Accounting
.................................................................................................................................
9 Reconciliations
.........................................................................................................................
9 Additional Reporting
............................................................................................................
12 Security
......................................................................................................................................
12 NSLDS
.......................................................................................................................................
13 Unique Client/Lender Requirements for Federally Serviced Portfolio
........... 14 Loan Conversion
...................................................................................................................
16 All_InitialReq_v21.0 2

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Attachment A-1 General Statement It is the intent of the Department to procure a
performance-based contract(s) that promotes competition and provides best of
business services. To achieve this goal, the Department expects each servicer to
provide commercially available services that will yield high performing
portfolios and high levels of customer satisfaction. The following statements
apply: - Servicers will be required to meet all statutory and legislative
requirements. - Servicers will use their own discretion in deciding to provide
services or business functionality that is recommended but not required. -
Servicers may leverage all borrower repayment channels while maintaining
existing branding provided all federally held loans are clearly distinguished
and identified, and borrowers are directed to make payment directly to the
Department via a U.S. Treasury lockbox or electronic payment service. - Small
differences due to rounding in various calculations are understood and accepted
providing the calculation itself is in compliance with federal regulation. - The
Department will allocate volume based on defined and understood performance
metrics. - The Department does not intend to provide additional service level
requirements. The Department does, however, expect best of business practices to
be deployed. - The Department will not require the use of the Department or FSA
logo on letters, web sites, etc. - Servicers will have full discretion to
promote or not promote services as long as they meet legislative and regulatory
requirements and are cost neutral to the Government. - Servicers will have
discretion to provide services to schools. - Servicers may use their own
authentication process as long as the process is fully compliant with federal IT
security guidelines. - With regard to split borrowers, it is acceptable for
servicers to handle requests, phone calls, etc. for all loans being serviced by
that servicer, regardless of the holder (Federal or Non-Federal), as long as all
federal laws and regulations are met. Financial Reporting 1. The servicer shall
uniquely identify each specific activity (e.g., Collection of Principal,
Collection of Interest, etc.) in the transaction level data. 2. The servicer
shall provide required accounting reports. A preliminary list is presented
below. a) Trial Balance by Fund & a Working Trial Balance By Fund b) Detailed
Trial Balance by Transaction Type c) Sub ledger Reconciliation Reports d)
Transaction Tables and mapping (Crosswalk) to the Department’s general ledger
system, the Financial Management System (FMS), including transaction
descriptions and amount fields. e) Cash Receipt Detail f) Cash Disbursement
Detail g) Report of Debts Assigned by Assignor (Lender, GA, Intra-Fund
Transfers) All_InitialReq_v21.0 3

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Attachment A-1 h) Report of Loans Consolidated (by Fund, Cohort Year, Loan
Program Type, Risk Category) i) Report of Loans Rehabilitated (if applicable) j)
Loan portfolio performance reports (by Fund, Loan Type, cohort year and risk
category). k) Collection Activity Report - The report summarizes by Current
Month, Current Quarter, and Year to Date for each Loan Type, the number of loans
and the amount of loans for each delinquency stage. l) Loans Transferred to and
from the Department’s Default Management Collection System (DMCS)- The report
has 3 parts: a. Loans Transferred to DMCS - Displays by transfer date the total
number of borrowers, total number of loans, total principal balance at time of
transfer, and date DMCS accepts the loans for each weekly transmission to DMCS.
b. Rejected and Re-transfer to DMCS - Displays by re-transfer date the total
number of loans, total number of borrowers, total principal balance, and date
DMCS accepts the loans for each weekly transmission to DMCS. c. Transfers by
Loan Type - Displays by transfer date, total number of borrowers, and total
number of PLUS, Stafford, and Consolidation. m) DMCS Recall and Rehabilitation
Tracking Report - The report displays by month/year the total number of
borrowers recalled from DMCS, total number of loans recalled, total number of
Rehabilitated loans and borrowers received from DMCS. n) System Balancing
Reporting of daily, weekly and monthly activity sent and received with each
interfacing partner at the Batch level and at the Transaction Type, Transaction
Count, Transaction Amount levels. Reports activity sent and activity received;
and balances activity received to activity accepted and rejected. o) Financial
Transactions Reconciliation Report of all daily, weekly and monthly transactions
posted on the servicing system for each interfacing partner. Displays summary
data by financial transaction type, number, and dollar amounts. p) Work in
Process Reports of activity received and accepted into the servicing system, but
not posted to borrower accounts for each interfacing partner. Displays detail
level transactions at the loan level for all financial transactions received but
not posted. Includes applicable dollar amounts and reflects aging of each
transaction. Reporting can include, but is not limited to, pending
disbursements, loan adjustments, consolidation payoffs, etc. (See below for
specific unapplied cash reporting). Daily cumulative reporting with the last
daily report for the month reflecting the WIP balances as of month end. q)
Unapplied Cash Payment Recycle report: Payment and Payment adjustment activity
received and accepted into the servicing system but not posted to borrower
accounts. Reporting is by payment source (including, but not limited to:
lockbox, electronic debit, IPAC, etc.) Displays detail level cash payment and
payment return/adjustment transactions at the borrower level and includes
All_InitialReq_v21.0 4

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Attachment A-1 Treasury document information (schedule number, schedule amount
and schedule type) and aging of each transaction. Daily cumulative reporting
with the last daily report for the month reflecting the WIP balances as of month
end. r) Ad-hoc reporting capability and access for the Department (see
“Reconciliations”). Treasury 3. The servicer shall require entities making
payments on Government loans (borrowers, lenders, etc) to direct payments to a
Treasury designated service including: a) Treasury lockbox b) Pay.gov c)
Remittance Express d) IPAC. Note: Receipts must be processed in accordance with
guidance provided in Treasury Financial Management (TFM), available at
www.fms.treas.gov/tfm/index.htm 4. The servicer shall establish an interface
with the Treasury lockbox service for the receipt of payment posting file and
returned payments files. 5. The servicer shall establish an interface with
Pay.gov for the receipt of ACH debits and credit card payments. 6. The servicer
shall establish an interface for Remittance Express (REX) to support receipt of
ACH credits. REX provides FSA and the servicer with download capability of an
activity file with optional fields for identifying borrower accounts. 7. The
servicer shall establish an interface for the receipt and processing of Inter-
Governmental Payment and Collection (IPAC) systems payments. IPAC provides FSA
and the servicer with download capability of an activity file with optional
fields for identifying borrower accounts. 8. The servicer shall post payments to
the borrower accounts on the same date of receipt of payment information from
Treasury. If the servicer directly receives payments, those payments will be
deposited to Treasury on the day of receipt. 9. The servicer shall maintain a
recycle or unapplied file of any payment/payment return transactions that cannot
be posted to a borrower account. The servicer shall perform due diligence to
research payments held in suspense for the purpose of resolving the unposted
items including: posting payment to appropriate borrower account; refunding to
remitter; or escheatment to Treasury. 10. The servicer shall obtain daily
deposit information from Treasury's Ca$hLinkII system to support accounting
processes and controls, such as daily and monthly reconciliations. 11. The
servicer shall maintain proper controls over payment posting and accounting
activities, and perform daily and monthly required reconciliations. 12. Issuance
of Refunds - The servicer shall promptly manage credit balance accounts, and
other payments and accounts requiring a refund. The Servicer shall process
refund transactions to borrowers (borrower overpayments), lenders (such as
consolidation overpayments), etc. All_InitialReq_v21.0 5

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Attachment A-1 a) The servicer shall establish an interface and process payments
refunds via interface via interface with FSA's Financial Management System (FMS)
using the FMS standard file format (see FMS Attachment A). b) Batches of refunds
shall be subject to FSA review and approval. c) The servicer shall receive and
work from a Treasury Confirmation Report available through Treasury's
Government-Wide Accounting System (GWA). This confirmation data will be used to
provide information to borrower inquiries on refund status. The GWA report
confirms the completion of processing on a batch, and provides the first and
last check number for the batch. d) The servicer shall receive a report of
Treasury Cancellations, maintain cancellation data, and shall provide
information for borrower inquiries and support re-issuance of refunds. e) The
servicer shall perform due diligence on cancelled refunds, on issuance of
validated refunds, and will follow Treasury guidelines for escheatment. f) The
servicer shall request FSA to cancel refunds, when appropriate. g) The servicer
shall use FSA's student application internet gateway (SAIG) to transmit refund
requests to FMS. h) The servicer shall pass Treasury cancellation data to FMS
using the FMS standard file format (see FMS Attachment A). Transaction
Management 13. The servicer shall establish a system and processes to correctly
record all transactions on their database and to post summary transactions to
the FSA’s general ledger (FMS) on the same business day they are generated. 14.
All servicer transactions shall include all fields as required by FMS and all
amounts applicable to each transaction type. 15. All servicer transactions must
pass all FMS edits for posting into the general ledger. 16. The servicer shall
ensure all transactions are reversible. 17. The servicer shall provide unique
transaction reporting for each type of loan activity. 18. All servicer
transactions will be accurately translated (mapped) from the Servicer's
subsidiary ledger to FSA's general ledger (FMS). 19. The servicer shall maintain
both the posting date and effective date of the transactions on their system.
20. The servicer shall provide an audit trail that efficiently links their
detailed transactions in the subsidiary ledger to summarized transactions in
FSA's general ledger. Transactions must have sufficient audit trail to support
efficient tracing. 21. The servicer shall include original Treasury document
numbers on applicable transactions, in addition to any system created document
numbers (including but not limited to: SF215, SF5515, SF1166, SF1098, and
SF1081). The usage of Treasury documents is described on the web site
http://fms.treas.gov/index.html. 22. The servicer shall assign and retain the
Credit Reform Code (CRC), recording and reporting on all loan related
transactions at the CRC level. Federal Credit Reform Act legislation and
Treasury guidelines for reporting are described on the web site
http://fms.treas.gov/index.html. Appendix A (CRC Codes) of Attachment C (FMS
File Layouts) describes how CRC codes are generated. All_InitialReq_v21.0 6

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Attachment A-1 Internal Controls 23. The servicer shall incorporate a system of
internal controls consistent with federal laws, regulations, policies and
authoritative guidance. These laws, regulations, and guidances include, but are
not limited to: Federal Financial Management Improvement Act (FFMIA); Federal
Managers' Financial Integrity Act (FMFIA); CFO Act; Government Performance and
Results Act (GPRA); GAO's Green Book; OMB Circulars A-123, 1-127, and A-130;
Joint Financial Management Improvement Program (JFMIP); and Treasury Financial
Manual (TFM). 24. The servicer's procedures and systems shall include a system
of internal controls that ensures resource use is consistent with laws,
regulations and policies; resources are safeguarded against waste, loss, and
misuse; and reliable data are obtained, maintained, and disclosed in reports.
Appropriate internal controls shall be applied to all system inputs, processing
and outputs. Examples of Internal Control Standards to be implemented by the
servicer include the following: a) Review and Reconciliation: Records are
examined and reconciled to determine that transactions were properly processed
and approved. b) Execution of Transactions: Independent evidence is required to
be maintained to ensure that authorizations are issued by persons acting within
the scope of their authority and transactions conform with such authority. c)
Segregation of Duties: Proper segregation of duties is required to exist among
functions including: authorization, execution, recording and reviewing
transactions, custody of assets, and performing reconciliations. d) Qualified
and continuous supervision is required to be provided to ensure that proper
internal control is maintained. e) Access to and Accountability for Resources:
Access to resources and custody and use of resources is required to be assigned
and maintained. 25. The servicer shall provide FSA with supporting documentation
for FSA's OMB Circular A-123 annual review, the annual Financial Statement
Audit, and other audits and reviews (as further described in the Requirement #29
below on Audit Support Services and in Audit Attachment A, “Audit Support
Requirements”). 26. The servicer shall consult with FSA during FSA's OMB
Circular A-123 annual review process and for other audits, so that FSA can: (a)
maintain its understanding of the servicers controls (in the context of GAO
Internal Control Standards and the Committee on Sponsoring Organizations (COSO)
control framework), (b) maintain FSA documentation depicting the servicer's
controls and process flows (as further described in Requirement #29 below on
Audit Support Services and in the attachment, "Audit Support Requirements"), and
(c ) maintain FSA's test plan, which will call for the provision of supporting
materials from the servicer. 27. The servicer shall be responsible for resolving
all deficiencies identified during audits and participating in corrective action
plans as needed. 28. The servicer shall provide FSA with support for conducting
FSA site visits to servicer centers of operation. The purpose of the site visits
will be to enable and enhance FSA's plans for the conduct of its A-123 review.
In addition, during the site visit, FSA All_InitialReq_v21.0 7

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Attachment A-1 will observe the execution of selected processes for compliance
with stated procedures and system function. 29. The servicer shall provide Audit
Support Services, upon request, including but not limited to the following
audits and reviews. The “Audit Support Requirements” document attached provides
additional information on the annual Financial Statement Audit and describes the
“Prepared by client” (or PBC) process that will be used by the auditor and/or
FSA to submit requests for documentation, data, and/or walkthroughs and for the
servicer to fulfill these requests.: a) FSA’s annual Financial Statement audits;
b) Assessments of internal controls in accordance with FMFIA and OMB Circular A-
123, Appendix A; c) Program-specific financial and compliance audits conducted
by GAO, OIG, and/or OMB; d) FISMA audits; e) Certification and Accreditation
reviews; f) Internal reviews; g) Contract oversight activities; and h) Agreed
Upon Procedures Audits for Loan Purchase Programs. This support generally
includes, but is not limited to: making resources and facilities available,
participating in audit planning (such as to determine when resources would be
made available and for what purpose), responding to “prepared-by-client” (PBC)
requests, reporting status, and remediating deficiencies identified. At a
minimum, PBC requests will include: interviews, access to process and system
documentation, standard and ad hoc queries and reports, and general questions on
processes, systems, data, and/or other matters. 30. The servicer shall meet
requirements for a Type II SAS 70 audit. It is anticipated that performance of
the Type II SAS 70 audit with an unqualified opinion and submission of the
resulting work papers will eliminate or substantially reduce audit work
performed by various auditors, internal and external to the Department, as part
of the Department-wide and Government-wide annual audits. As part of their
contracts with various lenders, servicers also normally have a SAS 70 audit
performed annually by a qualified independent auditor. a) For IT controls, the
servicer shall supplement the Type II SAS 70 with additional agreed-upon
procedures resulting in an audit consistent with GAO’s Federal Information
System Control Audit Manual (FISCAM). The results of these procedures should be
conducted and reported at least annually, with a year-end of 6/30. Further, the
servicer shall provide FSA with a “bridge letter” covering the period from 6/30
to 9/30 indicating no changes to the control environment. b) For operational
controls, the servicer shall ensure that the Type II SAS 70 covers all GAO
Internal Control Standards or COSO Components (e.g., control environment, risk
assessment, control activities, information and communication, and monitoring)
for those transactions processed by the servicer. The results of these
procedures should be conducted and reported at least semi-annually covering the
periods 1/1 – 6/30 and 7/1 – 12/31. All_InitialReq_v21.0 8

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Attachment A-1 Accounting 31. The servicer shall create a financial interface
between the FSA servicer and FSA Financial Management System (FMS) to provide
financial data to FMS on a daily, weekly and monthly basis. a) The data and data
layouts to be provided within this interface are described in the FMS Attachment
C – FMS File Layouts b) Submission / send rules for these transmissions are: 1.
In addition to daily transaction files, servicer shall send weekly (summary) and
monthly (interest and adjustment) files to FMS. 2. Servicer shall use secure
FSA’s SAIG mailbox to place daily, weekly and monthly files on the FMS server
for processing in FMS. 32. The servicer shall conduct accountancy, ensuring that
transactions of the servicer’s subsidiary ledger are accurately recorded in the
FMS general ledger, to include: a) Managing the accounting transaction
processing between the subsidiary ledger and the general ledger. b) Preparing
procedural instructions and execution of manual procedures related to the
preparation of accounting transactions. c) Reconciling cash, accounts
receivable, accounts payable, and other general ledger accounts. d) Correcting
all differences between the subsidiary ledger balances and the control account
balances in the general ledger. e) Assisting FSA, FMS, and CFO in posting
financial data and recommending alternatives to resolve rejected activity and
variances. Reconciliations 33. The servicer shall perform reconciliations of
balances and activity as requested, that meet the following general
requirements: a) Reconciliation activity should demonstrate that all required
data is transmitted to the Department and that all omissions, duplications of
data, and recording errors are detected and corrected timely. b) All
reconciliations and financial accounting will be inclusive of principal,
interest and fee amounts. c) Monthly reconciliation between Servicing Trial
Balance by Portfolio and FSA’s general ledger (FMS) trial balance for each
individual balance sheet account (balances and activity). d) All programs are to
be accounted, reported and reconciled individually (distinct portfolios). e)
Portfolio balances must be supportable at the loan level. f) Unless otherwise
instructed, all reconciliation processes must identify and define specific
transactions causing differences. g) Unless otherwise instructed, all
requirements apply to each portfolio. h) Monthly reconciliations are due to FSA
by the 8th calendar day of the subsequent month. (e.g. Reconciliations for the
month of June are due July 8th.) i) Monthly reconciliations require contractor
review by at least one level of management. All_InitialReq_v21.0 9

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Attachment A-1 j) Monthly reconciliations require the signature of the preparer
and reviewer and the date of signatures. k) Signed monthly reconciliations and
all necessary supporting documentation are to be provided to FSA in Adobe .pdf
format. l) The servicer shall provide reports in the file format requested by
FSA. File format types would include, but are not limited to: the Microsoft
Office Professional Suite (Excel, Word, Access, etc.), Adobe (.pdf), text
(.txt), comma delimited (.csv) etc. m) Daily reconciliations are not standard
deliverables to FSA but are considered operational processes and subject to
internal control testing. n) Unless otherwise instructed, all reconciling items
arising from monthly reconciliations are to be researched and cleared within the
month subsequent to the reconciled period. For example, reconciling items for
the month of June must be cleared within July. This eliminates repeat
reconciling items. o) Unless otherwise instructed, all reconciling items arising
from daily reconciliations are to be researched and cleared within 48 hours. p)
Daily reconciliations include tracking and resolution of all work in process
activity. 34. The servicer shall reconcile loan sales as follows: a) Perform
daily 3-way reconciliation between invoice (pre-sale report), Bill of Sale from
selling lender, and conversion reports from servicing system. Offeror must be
able to produce the reconciliation at the deal, invoice, lender and summary
level. b) Perform daily and monthly over/underpayment reconciliation between the
Selling lender, servicing system, FMS and Treasury. c) Maintain resulting
accounts receivable/accounts payable reconciliation of over/underpayment
activity between the Selling lender & FMS. To include: 1. Maintain balance of
receivables from sellers and payables to sellers. 2. Invoice sellers for
accounts receivables. 3. Process FMS accounts payable refund request to sellers
(see Refund Reconciliations for specific requirements). 4. Process overpayment
refund collections from Selling lenders. 5. Maintain clear audit trail of
overpayment refund transactions processed to Treasury deposits. d) Daily
reconciliation to assure that the FMS net funding transactions purchasing loans
equal the net loans accepted and either posted or pending posting (traceable in
work in process files) to the servicing system by the next day. e) Daily
reconciliation of activity sent from sellers to accepted and either posted or
pending posting (traceable in work in process files) on the servicing system.
35. The servicer shall reconcile transfers as follows: a) Servicer will provide
for loan exchange and reconciliations between servicing system and FSA servicing
systems. Servicer will maintain portfolio integrity upon re-entry into the
servicing system. b) Perform daily reconciliation on transfers of loans between
the Servicing system and each FSA servicing system. All_InitialReq_v21.0 10

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Attachment A-1 c) Perform monthly reconciliation of transfers of loans between
the servicing system and each FSA servicing system. 36. The servicer shall
reconcile cash collections as follows: NOTE: The terms “recycle file”, “suspense
account” and “unapplied file” are defined as the transactional level cash
payments and payment adjustments received but not posted to borrower accounts on
the servicing system. a) Record all incoming check & electronic collections
received (deposits) to the cash clearing account (level 1); reverse collection
transactions from cash clearing account when posted to borrower accounts (level
2). b) The application process for postable cash payments and payment returns
must be completed within 48 hours of collection receipt. c) Reconcile all cash
activity to Treasury daily. This includes, but is not limited to: electronic
funds transfer (EFT), checks (SF 1166), Intra-governmental Payment and
Collection (IPAC) System/SF 1081 payments, internal electronic cash
transactions, and any other payments to or deposits with Treasury. d) Perform
daily collection reconciliation among the various Treasury receipt channels
(i.e. Lockbox, Pay.gov, Remittance Express, and IPAC), servicing system and FMS
general ledger. Collection transactions are to be posted to FMS daily. e) Daily
reconciliation to ensure Total Cash Received (check and electronic) = (Total
Cash Payments Posted to Borrower’s accounts + New Recycle File Items). f) Daily
reconciliation to ensure Outstanding Recycle File Balance = Beginning Recycle
File Balance + New Recycle File Items - Recycle File Items Posted to Borrower
Accts - Refunds of Misdirected Payments - Treasury Escheatment. g) Monthly
reconciliation of the Servicer’s unapplied cash payment recycle file balance at
the servicing system to the FMS Unapplied Collections general ledger account. h)
Monthly reconciliation of Treasury bank statement to FMS and Treasury. 37. The
servicer shall reconcile refunds as follows: a) Maintain daily and monthly
three-way reconciliation of refund activity among the servicing system, FMS
accounts payable system and Treasury. 1. Process overpayment refunds, refund
cancellations, and stop payments posted to borrower accounts. 2. Refund
transactions processed on the servicing system for misdirected payments. 3.
Track and reconcile refund transactions to refund requests (FMS accounts
payables) to Treasury confirmations. 4. Track and reconcile refund cancellation
transactions processed on servicing to refund reversals in FMS to Treasury
cancellations. 38. The servicer shall provide ad hoc reporting tools to support
reconciliations: Servicing Trial Balance by Portfolio – using FSA/FMS
transactional account mapping, must be capable of producing daily, weekly, ad
hoc, and monthly trial balances at a summary and detailed transactional. If
multiple databases are employed each database will be reported individually as
well as on a consolidated basis. All_InitialReq_v21.0 11

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Attachment A-1 39. The servicer shall perform daily, weekly and monthly system
balancing of all data transmitted to and from the servicing system. a) Balancing
will be done at the transaction type, transaction count and transaction
amount(s) levels. b) Balancing will ensure data sent = data received; and data
received will = the sum of data accepted and rejected. c) Rejected data will be
researched, resolved/resent by the originating system. Additional Reporting 40.
The servicer shall provide a data file (daily for the previous day’s activity,
monthly for previous month's activity) to FSA containing standard data elements
needed for additional financial and portfolio analysis. FSA will determine the
type of file, transfer specifications, and specific data elements to be included
in the file. 41. The Servicer shall ensure that the balances reported to FSA
within the daily/monthly data files reconcile to the balances reported in the
Servicer’s servicing system as well as to the Servicer’s FMS accounting
interface file. 42. The servicer shall provide reasonable additional support as
needed (e.g., data files, reports, source documents) to substantiate reported
activity and balances. Security 43. The Servicer shall restrict access to FSA
held loans being serviced from all other loans on their system. Access must be
limited to personnel who have obtained proper clearances and who are
specifically authorized to view or perform transactions and services on loans
held by FSA. 44. The servicer shall provide previous security information from
the past three years to include a discussion of security incidents; and audits
like SAS 70s, Sarbanes Oxley reviews, independent security assessments, risk
assessments, and/or internal reviews along with the applicable remediation
plans. 45. The servicer shall provide its system's most current vulnerability
scan results, and remediation plan. 46. The servicer shall provide existing
security documentation like its security organizational structure, its system's
boundary, existing security policy, procedures, and plans. 47. The servicer
shall complete personnel background screening requirements ASAP. a) All
personnel are required to complete a federal background clearance based on their
position risk level. Background clearances are submitted on line via Office of
Personnel Management (OPM)'s Electronic Questionnaire for Investigations Process
(e-Qip). Contractor employees who have undergone appropriate personnel security
screening for another federal agency may submit proof of personal security
screening for validation. (Attached Security Attachment A - Department of
Education's Directive for Contractor Employee Personnel Security Screenings.) b)
Preliminary clearances must be completed for high-risk positions prior to
working on Federal Student Aid systems or data (This process can take 2-6
weeks). All_InitialReq_v21.0 12

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Attachment A-1 Moderate and low risk positions must submit background clearance
paperwork prior to working on Federal Student Aid computer resources. c)
Non-U.S. Citizen may be assigned to a High Risk IT (6C) level position,
provided: he/she is a Lawful Permanent Resident of the United States and has
resided continuously in the United States for a minimum of three (3) years.
Non-U.S. Citizens living outside of the United States cannot have the capability
to access Federal Student Aid systems or data. 48. The servicer shall complete a
self-assessment of it's system and facilities based on NIST SP 800-53 controls,
identify security deficiencies/gaps, and create a remediation plan for the
identified deficiencies. 49. The servicer shall agree to provide support for all
actions required for a formal security authorization and continuous monitoring
program as defined by NIST SP 800-37. 50. The servicer shall create a project
plan that they will follow to develop a NIST SP 800-18 compliant System Security
Plan created in the Department of Education format. 51. The servicer shall
bundle the requested information in requirements 39 - 45 above as attachments to
a discussion document that provides a discussion for each requirement and
artifact submitted. The cover page for this package will include a
self-certification document identifying the system's security posture to include
its overall security risk. The cover page will be signed by the servicer's
senior security official and program manager attesting that the information
within the package is accurate. NSLDS 52. The servicer shall report in the same
format as a Guaranty Agency (GA) for all loans serviced for Federal Student Aid
by creating an NSLDS data base extract file containing FFEL loans and transmit
the FFEL Loans data to NSLDS using the reporting requirements detailed in the GA
Data Provider Instructions with minimal differences. The Servicers will be
provided a GA and Lender Code to be associated with each loan. The Servicers
will report the date of default and loan status for default as day 271, using
NSLDS loans status fields. The Cohort Default Rate date will be reported at day
361, using the NSLDS Claim Payment fields. A list of these filed changes will be
provided. The GA Data Provider Index of fields that are required of the FFEL
servicers in addition to more information on Guaranty Agency Data Provider
Instructions can be found at the GA DPI Link
(http://ifap.ed.gov/nsldsmaterials/0605DPInstNSLDS.html). 53. The servicer shall
use the NSLDS provided DataPrep software (or equivalent) to perform Extract
Validation and create a Submittal file. 54. The servicer shall send the
submittal file to NSLDS on an established weekly schedule. 55. Once loans have
been reported, the servicer shall report to NSLDS all FFEL open loans. Closed
loans must be continually reported until closed status is successfully accepted
by NSLDS. This includes loans that are closed prior to initial NSLDS reporting.
All_InitialReq_v21.0 13

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Attachment A-1 56. The servicer shall retrieve the Load Process Error file from
NSLDS for each submittal. The servicer must review errors and correct as many as
possible before the next weekly submittal. 57. The servicer shall identify when
key borrower indicators have change and report on both the old data and the new
data. 58. The servicer shall work with other data providers—including other GAs,
the Direct Loan Program, the Debt Management Collection System, Perkins schools,
and the Common Origination Disbursement System—to resolve identifier conflicts
including assigning pseudo SSNs where appropriate (see NSLDS DPI). 59. The
servicer shall update date, amount and reason for defaults based on current
default criteria if the loans are transferred to DMCS or CDDTS. Once a loan has
transferred to DMCS or CDDTS, stop reporting on the loan unless it is
transferred back. When transferring loans the borrower and loan identifiers must
be the same identifiers reported to NSLDS. For Rehabilitated Loans, the Date or
Maturity should not change. 60. The servicer shall report as a GA for all loans
serviced for Federal Student Aid. 61. The servicer shall utilize NSLDS on-line
updating functionality to resolve customer service issues and to report loan
discharge and Teacher Loan Forgiveness information. 62. The Servicer shall
transmit data to and from NSLDS via the Student Aid Internet Gateway (SAIG) or
other approved secure transmission methods. Additional information on SAIG
transmissions can be found at https://www.fsadownload.ed.gov/mainframeguide.htm.
63. The servicer shall meet NSLDS reporting requirements and quality standards.
All data submitted to NSLDS must be as complete and correct as possible. 64. The
servicer shall accept and store enrollment data and updates from NSLDS as the
official source of such data. 65. The servicer shall continue to follow Common
Manual Delinquency reporting to schools. 66. The servicer shall provide
additional data elements to the re-engineered NSLDS. These elements will
include, but not be limited to: delinquency data, discharge data, forgiveness
data, and school/ISIR data. This data has been worked through the community on
the FFEL Data Standards Team and can be found online. 67. The servicer shall
work with FSA data providers on changes to interfaces as re- engineering
projects occur. 68. The servicer shall accept a file from NSLDS when receiving
loans from DMCS and CDDTS in order to update the records with missing data
elements. Unique Client/Lender Requirements for Federally Serviced Portfolio 69.
The servicer shall use the client name Department of Education for this
portfolio. 70. The servicer shall use the Government assigned client LID for
this portfolio. 71. The servicer shall use the Government assigned Guarantor
Code for this portfolio. 72. Each servicer will be assigned a unique code.
All_InitialReq_v21.0 14

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Attachment A-1 73. The servicer shall maintain unique standard reporting for
loans within each Program (i.e. 08/09 Loan Purchase Program, Puts from 08/09
Participation Program, 09/10 Loan Purchase program, Conduit, Direct Loan, etc.)
74. The servicer shall process refunds via Treasury checks. Refunds are required
for overpayments greater than or equal to $5.00. 75. The servicer shall perform
small balance processing as follows: a) Overpaid Amount – Small balance
write-ups of overpaid balances less than $5.00. b) Underpaid Amount – Small
balance write-off of underpaid balances less than $25.00. 76. The servicer shall
have the ability to charge late charges, but no assessment of late charges on
loans in the ED portfolio is to be assessed at this time. 77. The servicer shall
have the ability to charge other fees (i.e. NSF), but no charges for other fees
on loans in the ED portfolio are to be assessed at this time. 78. The servicer
shall have the ability to support borrower benefit plans required by each loan
purchase (PUT) program. 79. 799/LARS reporting is not required for ED portfolio.
80. The servicer shall have the ability to perform collection and due diligence
activities "as required by legislation and/or regulations." Servicers will be
required to provide collection and default aversion activity on loans serviced
under this contract as long as the loan remains on the servicer’s system. If a
borrower reaches the 360 days delinquent, the servicer will be required to
transfer the loan to the DMCS. a) The servicer shall send and electronic
transfer file to DMCS with required information about the defaulted borrower and
the defaulted loan. b) The servicer shall provide access to all required
collateral information for the defaulted loan. c) The servicer shall accept and
resolve rejected records received from DMCS. 81. The servicer shall process
discharge transactions with required supporting documentation following the
required regulatory guidelines. The servicer is required to facilitate the
timely and accurate processing of discharge requests by ensuring that complete
loan discharge documentation for the individual is submitted. The servicer is
also required to make a determination based on complete loan discharge
documentation and applicable guidelines. Depending on the discharge type, the
Department reviews discharge decisions through a sampling methodology or
conducts a complete review. 82. The servicer shall transfer loans to the
Conditional Disability and Discharge System once loans have been determined as
eligible to be transferred. 83. The servicer shall obtain school information
needed from the Postsecondary Education Participants System (PEPS). 84. The
servicer shall be prepared to provide procedure and/or training materials when
requested by ED. ED may review these documents to ensure regulatory and
legislative requirements are met. 85. The servicer shall be required to transfer
loans to, or accept loans from, another servicer at the request of ED.
All_InitialReq_v21.0 15

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Attachment A-1 86. The servicer shall provide access to account level
information and collateral for all federally held loans using technology
supported by ED (web-based, terminal emulation, etc.). Loan Conversion The loan
conversion process occurs when a seller requests ED to purchase loans, and ED
validates the seller’s approval to participate, checks the eligibility of the
loans, provides payment to the seller, and takes ownership of the loans as
federally held assets. Below are the requirements a servicer must complete in
addition to the existing requirements to service an FFEL loan: 87. The servicer
shall create and maintain a Loan Purchases Tracking Log - to include: Checklist
of loan purchase activities, status of activities, and loan counts/amounts. SEE
Conversion ATTACHMENT A – Sample of Loan Purchases Tracking Log. 88. The
servicer shall provide Loan Purchases Tracking Log to FSA, CFO, and OCFO on a
periodic basis. 89. The servicer shall accept 45-day notices submitted by
sellers via email. SEE Conversion ATTACHMENT B – Sample of 45 Day Notice. 90.
The servicer shall inform FSA when a 45-day notice has been received. 91. The
servicer shall send an acknowledgement of receipt of the 45 Day notice to the
Seller via email. 92. The servicer shall validate, with FSA contact, the status
of the seller’s Master Loan Sales Agreement (MLSA). 93. The servicer shall
notify seller if any additional MSLA approvals or documentation are needed for
the sale and schedule the sale date with the seller's Servicer. 94. The servicer
shall notify FSA of the status of the MLSA package, if necessary. 95. The
servicer shall perform testing of the loan conversion transfer file process with
sellers. SEE Conversion ATTACHMENT C – Sample of a loan conversion transfer file
layout. 96. The servicer shall receive loan conversion transfer file from the
seller via FTP or other approved transfer method. 97. The servicer shall review
the loan conversion transfer file and notify FSA, CFO, OCFO of differences
between the 45-day notice and loan conversion file as needed. 98. The servicer
shall perform edits on the loan conversion transfer file. Note: edits may vary
based on purchase program. 99. The servicer shall prepare report identifying any
errors with the loan conversion file and/or any loans not eligible for sale.
100. The servicer shall provide results of edit errors to the seller, FSA, and
designated parties. The servicer shall work with the seller to resolve errors.
101. The servicer shall send an acknowledgement of receipt of the 45 Day notice
to the Seller via email." 102. The servicer shall work with the Seller to
confirm sales parameters, including but not limited to: a) Identify any loans in
the sale have any liens on them. All_InitialReq_v21.0 16

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Attachment A-1 b) Identify if the loans are part of a Put from Participation or
a straight Put to the Department. c) Identify timing for receipt of Loan
Conversion Transfer file from the Servicer, if needed. 103. The servicer shall
calculate pre-sale totals and final purchase price after errors have been
resolved. 104. The servicer shall create a pre-sale detail loan report including
loan details for all loans included in the sale. SEE Conversion ATTACHMENT D –
Sample of pre-sale detail loan report. 105. The servicer shall transmit pre-sale
detail loan schedule to seller for validation by seller. 106. The servicer shall
create invoice total file and submit to SAIG mailbox to be 'swept' by FSA CFO.
SEE ATTACHMENT Conversion E – Invoice total file layout. 107. The servicer shall
receive Bill of Sale and related documents. SEE Master Loan Sale Agreement –
Exhibit B – Sample of Bill of Sale. 108. The servicer shall validate Bill of
Sale package is authorized and complete. 109. The servicer shall validate
Schedule and Security Release Certificate (SRC) has been received if loans are
subject to a security lien. SEE Master Loan Sale Agreement – Exhibit E – Sample
of Schedule and SRC. 110. The servicer shall flag loans subject to a security
lien in Tracking Log. 111. The servicer shall accept Notice of Assignments from
seller and notify FSA that payment will be sent to designee if a Notice of
Assignment is received. SEE Conversion ATTACHMENT F – Sample of Notice of
Assignment. 112. The servicer shall compare FSA Servicer pre-sale totals to
seller's pre-sale detailed listing of loans sold - identify and resolve
differences. 113. The servicer shall request seller to provide updated Bill of
Sale documents as needed. 114. The servicer shall validate FSA
approves/disapproves invoice of payment. 115. The servicer shall process the
loan sale transaction on servicing system when notified payment has been made.
Loans now reside on FSA Servicer's system. 116. The servicer shall reconcile the
Servicing System balance and activity to FMS for each purchase deal. Resolve and
differences and provide the reconciliation to FSA. 117. The servicer shall
reconcile the Servicing System balance and activity to FMS on a monthly basis.
Resolve and differences and provide the reconciliation to FSA. 118. The servicer
shall receive collateral documentation and review for completeness. 119. The
servicer shall identify and notify seller of missing collateral documentation,
work with seller to obtain required documentation. 120. The servicer shall
notify FSA of receipt of collateral and completeness of documentation. 121. The
servicer shall provide storage for, and access to, collateral documentation.
122. The servicer shall accept, edit and process loan adjustment files from
Servicer after close of sale. 123. The Servicer shall coordinate with the Seller
to receive and process any sales transition and post sale transactions,
including but not limited to, borrower All_InitialReq_v21.0 17

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Attachment A-1 payments, loan cancellations, school refunds, NSF transactions
for loans purchased by the Department. 124. The Servicer shall provide a process
to Put any ineligible loans back to the Seller, as needed (process "Unput"
transactions). All_InitialReq_v21.0 18

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Attachment A-2 Additional Servicer IINNTTEERRMMEEDDIIAATTEE Requirements
All_IntermediateReq_v6.0 All_IntermediateReq_v6.0 1

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Attachment A-2 Additional Servicer – Intermediate Requirements Required by
3/31/10 unless otherwise noted TABLE OF CONTENTS General Statement
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3 Financial Reporting
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4 Treasury
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4 Transaction Management
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Internal Controls
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5 Accounting
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5 Reconciliations
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5 Additional Reporting
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5 Security
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6 NSLDS
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10 Additional Requirements for Federally Held Portfolio
............................ 10 Loan Conversion
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11 Records Management
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Attachment A-2 General Statement It is the intent of the Department to procure a
performance based contract(s) that promotes competition and provides best of
business services. To achieve this goal, the Department expects each servicer to
provide commercially available services that will yield high performing
portfolios and high levels of customer satisfaction. The following statements
apply: - Servicers will be required to meet all statutory and legislative
requirements. - Servicers will use their own discretion in deciding to provide
services or business functionality that is recommended but not required. -
Servicers may leverage all borrower repayment channels while maintaining
existing branding provided all federally held loans are clearly distinguished
and identified. - Small differences due to rounding in various calculations are
understood and accepted providing the calculation itself is in compliance with
federal regulation. - The department will allocate volume based on defined and
understood performance metrics. - The Department does not intend to provide
additional service level requirements. The Department does, however, expect best
of business practices to be deployed. - The Department will not require the use
of the Department or FSA logo on letters, web sites, etc. - Servicers will have
full discretion to promote or not promote services as long as they meet
legislative and regulatory requirements and are cost neutral to the government.
- Servicers will have discretion to provide services to schools. - Services may
use their own authentication process as long as the process is fully compliant
with federal IT security guidelines. - With regard to split borrowers, it is
acceptable for servicers to handle requests, phone calls, etc. for all loans
being serviced, regardless of the holder as long as all federal laws and
regulations are met. All_IntermediateReq_v6.0 3

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Attachment A-2 Financial Reporting The following Financial Reporting
Requirements are required to be implemented by September 30, 2009: 1. The
servicer shall produce the Treasury Report on Receivables (TROR), for each
portfolio, on a monthly basis. The report must meet all Treasury/FMS guidance
(See Treasury attachments A & B). The TROR must also: a. Be provided in
Microsoft Excel Format; b. Be provided for the previous month by the 8th
business day of the current month; c. Include all supporting data /
documentation. The supporting documentation must also be provided for the
previous month (e.g., aging information, status information, etc.) in Microsoft
Excel format, by the 8th business day of the current month. 2. The servicer
shall provide all remaining required accounting reports. a. Consolidating Trial
Balance (All Funds) b. Monthly & Annual Sub ledger Reports (to include Closing
reports) c. Accounting Distribution Reports d. Specific Collection Reports (e.g.
Lockbox, ACH Credits, ACH Debits, Web payments, Credit Cards, etc.) e.
Receivable Aging Reports (by Fund, Cohort Year, Loan Program Type, Risk
Category) f. Loan Portfolio Analysis g. SF-224 for cash transactions with
Treasury ED Form h. Trial balance reports indicated under Reconciliation i. Loan
portfolio performance reports (by Fund, Loan Type, cohort year, & Risk Category)
j. Others as determined Treasury In 2010, Treasury will implement the
Transaction Reporting System (TRS). TRS will be a centralized repository of
detailed collection transaction information. TRS will provide integrated
transaction and deposit reporting of revenue activity across all collection
systems. Therefore, the servicer will be required to migrate its data recipient
interfaces for the Lockbox (checks and ACH credits), Pay.gov (ACH debits and
credit card payments), and CA$HLINKII (which reports detail for ACH credits that
are not processed via the lockbox servicer, and reports summary for all deposits
from all sources) to TRS. This requirement is estimated to be effective by
September 30, 2010. Treasury’s web site contains further information on the TRS
project at http://www.fms.treas.gov/trs/index.html. All_IntermediateReq_v6.0 4

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Attachment A-2 Transaction Management NO Additional Requirements beyond the
Initial Requirements Internal Controls 3. Effective from the first government
fiscal year of operations (i.e., as of 9/30/2009), the servicer shall develop
and execute the following reports in response to financial statement audit
“Prepared-by-Client” (PBC) data requests or as requested by management to
support other audits or reviews: a. Collections Download b. Write-Offs activity
– Download Requirements & Documentation Requirements c. Download of Transfers
activity to DCMS d. Additional work products to support responses to auditor
inquiries and requests ** Refer to the FMS_Attachment_D document attached for
additional details on these requirements. 4. The Servicer shall provide support
to FSA in compliance with OMB Circular A-123, Appendix C, which incorporates the
Improper Payments Information Act of 2002 (IPIA). Accounting NO Additional
Requirements beyond the Initial Requirements Reconciliations 5. The servicer
must demonstrate that all data transfers (e.g., interfaces, files) are balanced
across systems and reconciled at the transaction and balance level and all
exceptions noted are aged and resolved timely. The servicer shall report aging
of reconciling items on all reconciliations. The servicer shall resolve errors
and/or variances timely, generally within one month. Additional Reporting 6. The
Servicer shall provide a Disbursement Date Change (Cohort Year) Report (required
to be implemented by September 30, 2009) - The report All_IntermediateReq_v6.0 5

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Attachment A-2 displays all disbursement date changes after each quarter end
that crossed cohort years. It displays the Account Number, Loan Identification
Number, Principal Balances Outstanding, Interest Receivable Balances, Principal
Paid, and Interest Paid. 7. The servicer shall support the FSA implementation of
a ‘Data Warehouse’ including the conversion of the daily/monthly file transfers
to the warehouse. FSA will determine the type of file, transfer specifications,
and specific data elements to be included in the file. Security Federal Student
Aid agrees with the Office of Management and Budget (OMB) and Congress that the
security of its data and IT resources is one of our highest priorities.
Recognizing the need for agencies to have effective information security
programs, Congress passed the Federal Information Security Management Act
(FISMA) of 2002. FISMA provides the overall framework for ensuring the
effectiveness of information security controls that support federal computer
operations and assets. FISMA requirements apply to all federal contractors and
organizations or sources that possess or use federal information or that
operate, use, or have access to federal information systems on behalf of an
agency. FISMA mandates the use of the standards created by the National
Institute of Standards and Technology (NIST). and Federal Student Aid has
adopted those standards and guidance for securing its information technology
resources. Federal Student Aid security requirements indicated below ensure the
confidentiality, integrity and availability of its data at a high level. System
controls need to be tested and system documentation reviewed using an
independent source. If adequate security is in place, Federal Student Aid will
provide a formal security authorization to operate (ATO). Additional detailed
requirements can be found in NIST security standards, special publications, and
bulletins; OMB memorandums; and the Department of Education (DoED) policies and
procedures. The primary document Federal Student Aid uses to identify and
implement controls is NIST SP 800-53. The latest version of this guidance can be
found at: http://csrc.nist.gov/publications/nistpubs/800-53-Rev2/sp800-53-rev2-
final.pdf Personnel 8. All personnel are required to complete a federal
background clearance based on their position risk level. Background clearances
are submitted on line via Office of Personnel Management (OPM)’s Electronic
Questionnaire for Investigations Process (e-Qip). Contractor employees who have
undergone appropriate personnel security screening for another
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Attachment A-2 federal agency may submit proof of personal security screening
for validation. (Attached: Department of Education’s Directive for Contractor
Employee Personnel Security Screenings) 9. Preliminary clearances must be
completed for high-risk positions prior to working on Federal Student Aid
systems or data (This process can take 2- 6 weeks). Moderate and low risk
positions must submit background clearance paperwork prior to working on Federal
Student Aid computer resources. 10. Non-U.S. Citizen may be assigned to a High
Risk IT (6C) level position, provided: he/she is a Lawful Permanent Resident of
the United States and has resided continuously in the United States for a
minimum of three (3) years. Non-U.S. Citizens living outside of the United
States cannot have the capability to access Federal Student Aid systems or data.
11. All personnel are required to successfully complete initial security
awareness training within two weeks of employment and annual refresher training.
The training can be completed on line using DoED’s security training program.
12. Annual specialized training is required that is appropriate to job function.
Facility 13. Data Centers supporting Federal Student Aid systems are required to
have controlled access with working security cameras.. 14. Data center access
control lists must be kept current. . 15. Visitors must be logged and escorted
at all times. 16. Power equipment and power cabling for the information system
must be protected from damage and destruction. Facility failover power and
lighting are required for emergencies. 17. The facility must employ and maintain
fire suppression and detection, water damage controls, and temperature and
humidity controls. 18. Alternate data center worksites are required to have the
same protections as the primary data center site. Telecommunications 19. Data
transfers of PII or other sensitive information must be encrypted using NIST
certified encryption methods (see NIST standard, FIPS 140-2) 20. All
interconnections must be documented and have an Interconnection Security
Agreement in place. (see NIST SP 800-47) 21. Wireless communication containing
Federal Student Aid information is not permitted within the data center. 22. The
Federal Student Aid System Security Officer must approve all remote access.
Contingency Planning and Recovery 23. A contingency / disaster recovery plan is
required to provide continued operational service within 72 hours of a major
catastrophe. All_IntermediateReq_v6.0 7

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Attachment A-2 24. Contingency plans must be tested at a recovery site annually
using both DoED and Contractor personnel. 25. The recovery site(s) must be
geographically separated from the production site(s). 26. Data sanitation at the
recovery site is required after testing. (see NIST SP 800-88) 27. System backups
must be encrypted and kept at an alternate location with secured access.
Sensitive backup tapes must be marked and have a secure transfer. (Attached:
Federal Student Aid’s General Support System and Major Application Backup Media
Handling Policy & Procedures) Risk Management 28. Annual self-assessment of
security controls is required. . 29. Independent risk assessments will be
completed prior to system’s operation and then reassessed at a minimum of every
three years. 30. Independent security controls assessment will be completed. 31.
All identified vulnerabilities and security weaknesses will be captured and
corrective actions tracked through Federal Student Aids Operational
Vulnerability Management Solution (OVMS). Security remediations must be
implemented to correct security deficiencies and appropriate evidence must be
provided to close actions. 32. Contractors will make themselves and the site
available for security audits and control assessments. This includes interviews
with key security staff, data gathering and submissions, scanning support, and
escort activities. 33. Federal Student Aid will have the right to test controls
through independent scanning within the boundaries of the Federal Student Aid
system and by other means like interviews, observations, and to document
reviews. Security Documentation 34. The contactor will develop, implement, and
maintain a current system security plan (SSP) for the information system to
provide an overview of the security requirements for the system and a
description of the security controls in place or planned for meeting those
requirements. Designated officials within Federal Student Aid will review and
approve the plan. (see NIST SP 800-18) 35. A contingency plan must be created,
approved, and tested annually. 36. A configuration management plan must be
created, approved, and implemented. 37. Documented system boundaries are
required. A documented inventory of hardware and software utilized,
telecommunication interconnections and a network topology are required.
(Attached: Federal Student Aid’s Boundary Definition template). 38. System
access authorizations and signed rules of behavior must be maintained.
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Attachment A-2 39. Plans of Actions and Milestones that address security
remediations are maintained in Federal Student Aid’s Operational Vulnerability
Management Solution. Security Monitoring and Detection 40. Network intrusion
detection systems (NIDS) and host-based intrusion detection systems (HIDS) are
configured appropriately and continuously monitored and updated if necessary.
41. Systems will have appropriate auditing capabilities enabled. 42. System logs
are to be analyzed for suspicious activity. Logs will be made available to
Federal Student Aid upon request. 43. Compliance monitoring established for
configuration settings. 44. Routine network and database scans are scheduled.
The scan results are analyzed and vulnerabilities identified. The identified
vulnerabilities and actions taken will be documented in OVMS. 45. Scans that
identify web vulnerabilities will be completed. Scan results will be provided to
FSA upon request. The identified vulnerabilities and actions taken will be
documented in OVMS. 46. Security remediations must be implemented to correct
security deficiencies and appropriate evidence must be provided to close
actions. Incident Response 47. Contractor must maintain an incident response
plan that correlates to the DoED plan. 48. Compromises of personal identifiable
information (PII) must be reported immediately so that the Department can comply
with its reporting requirements to report to U.S. Computer Emergency Readiness
Team (CERT) within one hour of the incident. 49. Contractor must preserve
evidence and allow external forensic analysis either on-site or through shipment
of components. 50. Contractor must take appropriate actions for alerts and
warnings provided by DoED or through other sources. Contractor will report
status of their actions as requested. Security Configurations 51. Federal
Student Aid data must be segregated from non-Federal Student Aid data. 52.
Security patches must be kept current and appropriately tested prior to moving
into production. 53. Server and device security configurations must be
maintained in accordance with NIST security configuration standards (See:
http://checklists.nist.gov/). 54. Passwords must meet Federal Student Aid’s
password standards. (Attached: Federal Student Aid’s Password Parameters Policy
& Procedures) All_IntermediateReq_v6.0 9

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Attachment A-2 55. Change control management procedures must be documented and
followed. 56. Federal Student Aid must approve system changes prior to
production implementation. 57. Data will be safeguarded commensurate with the
highest categorization level based on FIPS 199. Access Control 58. Federal
Student Aid must approve all access to Federal Student Aid data and all
contractor access that can affect any component within the system’s boundary.
59. Application access reports need to be sent quarterly to Federal Student Aid
for certification of access. 60. A listing of IT personnel responsible for
operations and maintenance of any Federal Student Aid system must be provided on
a quarterly basis to FSA for certification of access. 61. Access must be
restricted based on least privilege. Role based access controls should be
defined and documented. NSLDS 62. The Servicer shall provide the National
Student Loan Clearinghouse monthly updates to their federally serviced
portfolio. National Student Clearinghouse (NCS) will provide weekly updates to
NSLDS for all FFEL and DL loans in the FSA portfolio. NSLDS will provide the
servicer with weekly enrollment data that include NSC updates. Additional
Requirements for Federally Held Portfolio 63. The servicer shall receive
collateral in imaged and paper format and if received in paper format image it
should be imaged in a format that can be ported easily to another system
(Non-proprietary) 64. The servicer shall verify collateral for all loans
received in a sale within 45 days and if any collateral is missing the missing
collateral will be obtained from the seller. 65. The servicer shall provide for
FSA access to the imaging and serving system to view images, make annotations on
borrower accounts and have complete access to view FSA data. 66. The servicer
shall provide a means for FSA to make a final determination on eligibility of
borrowers for entitlements, such as discharge due to Closed School, Death, etc.,
and compromise offers. 67. The servicer shall report loans to NSLDS and credit
bureaus. 68. The servicer shall cancel loans and make all financial adjustments
when needed. 69. The servicer shall place loans, where the borrower has applied
for bankruptcy, into a bankruptcy status, prepare a Proof-of-Claim and
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Attachment A-2 provide any additional support needed to defend the loan against
bankruptcy discharge. 70. The servicer shall accurately prepare and respond to
control correspondence (correspondence sent to FSA from the White House,
Congress, and other high government officials) and meet control turnaround times
established by the U.S. Department for FSA. 71. The servicer shall respond to
written and email questions and requests timely and accurately. 72. The servicer
shall respond and resolve customer complaints; and create and execute a plan to
escalate complaints to FSA and the Ombudsman. 73. The servicer shall have the
ability to provide borrower interest rate discounts and assess late fees if
directed to do so by FSA. 74. The servicer shall accurately and timely complete
and return Loan Verification Certificates received from consolidating lenders.
75. The servicer shall assign loans to DMCS for collection once they reach 360
days delinquent. If a loan is assigned in error the loan will be reinstated onto
the servicer’s system. 76. The servicer shall have the ability to accept and
service loans that undergo rehabilitation from the DMCS. 77. The servicer shall
provide FSA the ability to monitor phone calls remotely. 78. The servicer shall
support quarterly monitoring reviews completed by FSA. 79. The servicer shall
support annual program compliance reviews done by FSA, or by an agent of FSA.
Loan Conversion NO Additional Requirements beyond the Initial Requirements
Records Management 80. The Servicer shall comply with all of the following
standard items related to records management: a. Citations to pertinent laws,
codes and regulations such as 44 U.S.C chapters 21, 29, 31 and 33; Freedom of
Information Act (5 U.S.C. 552); Privacy Act (5 U.S.C. 552a); 36 CFR Part 1222
and Part 1228. b. Contractor shall treat all deliverables under the contract as
the property of the U.S. Government for which the Government Agency shall have
unlimited rights to use, dispose of, or disclose such data contained therein as
it determines to be in the public interest. All_IntermediateReq_v6.0 11

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Attachment A-2 c. Contractor shall not create or maintain any records that are
not specifically tied to or authorized by the contract using Government IT
equipment and/or Government records. d. Contractor shall not retain, use, sell,
or disseminate copies of any deliverable that contains information covered by
the Privacy Act of 1974 or that which is generally protected by the Freedom of
Information Act. e. Contractor shall not create or maintain any records
containing any Government Agency records that are not specifically tied to or
authorized by the contract. f. The Government Agency owns the rights to all
data/records produced as part of this contract. g. The Government Agency owns
the rights to all electronic information (electronic data, electronic
information systems, electronic databases, etc.) and all supporting
documentation created as part of this contract. Contractor must deliver
sufficient technical documentation with all data deliverables to permit the
agency to use the data. h. Contractor agrees to comply with Federal and Agency
records management policies, including those policies associated with the
safeguarding of records covered by the Privacy Act of 1974. These policies
include the preservation of all records created or received regardless of format
[paper, electronic, etc.] or mode of transmission [e-mail, fax, etc.] or state
of completion [draft, final, etc.]. i. No disposition of documents will be
allowed without the prior written consent of the Contracting Officer. The Agency
and its contractors are responsible for preventing the alienation or
unauthorized destruction of records, including all forms of mutilation. Willful
and unlawful destruction, damage or alienation of Federal records is subject to
the fines and penalties imposed by 18 U.S.C. 2701. Records may not be removed
from the legal custody of the Agency or destroyed without regard to the
provisions of the agency records schedules. j. Contractor is required to obtain
the Contracting Officer's approval prior to engaging in any contractual
relationship (sub-contractor) in support of this contract requiring the
disclosure of information, documentary material and/or records generated under,
or relating to, this contract. The Contractor (and any sub-contractor) is
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Attachment A-2 required to abide by Government and Agency guidance for
protecting sensitive and proprietary information. All_IntermediateReq_v6.0 13

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Attachment A-2 Additional Information regarding records management: Extract from
36 CFR Part 12, regarding records management responsibilities of contractors.
§1222.48 Data created or received and maintained for the Government by
contractors. (a) Contractors performing Congressionally mandated program
functions are likely to create or receive data necessary to provide adequate and
proper documentation of these programs and to manage them effectively. Agencies
shall specify the delivery of the Government of all data needed for the adequate
and proper documentation of contractor-operated programs in accordance with
requirements of the Federal Acquisition Regulation (FAR) and, where applicable,
the Defense Federal Acquisition Regulation Supplement (DFARS). (b) When
contracts involve the creation of data for the Government's use, in addition to
specifying a final product, agency officials may need to specify the delivery of
background data that may have reuse value to the Government. Before specifying
the background data that contractors must deliver to the agency, program and
contracting officials shall consult with agency records and information managers
and historians and, when appropriate, with other Government agencies to ensure
that all agency and Government needs are met, especially when the data
deliverables support a new agency mission or a new Government program. (c)
Deferred ordering and delivery-of-data clauses and rights-in-data clauses shall
be included in contracts whenever necessary to ensure adequate and proper
documentation or because the data have reuse value to the Government. (d) When
data deliverables include electronic records, the agency shall require the
contractor to deliver sufficient technical documentation to permit the agency or
other Government agencies to use the data. (e) All data created for Government
use and delivered to, or falling under the legal control of, the Government are
Federal records and shall be managed in accordance with records management
legislation as codified at 44 U.S.C. chapters 21, 29, 31, and 33, the Freedom of
Information Act (5 U.S.C. 552), and the Privacy Act (5 U.S.C. 552a), and shall
be scheduled for disposition in accordance with 36 CFR part 1228. 36 CFR Part
1228, Subpart K - Facility Standards for Records Storage Facilities. NARA
requires that the requirements of Subpart K be incorporated into the contract
requirements when records storage facilities are included in the contract. This
covers direct contracts with commercial storage vendors such as Iron Mountain;
it also covers contractors who store ED records as part of a larger service
contract. http://www.archives.gov/about/regulations/part-1228/k.html
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Attachment A-3 Additional Servicer FULL Requirements Full_Req_v6.0 Full_Req_v6.0
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Attachment A-3 Additional Servicer – FULL Requirements Required by 8/31/10
unless otherwise noted TABLE OF CONTENTS General Statement
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3 Direct Loans
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4 Full_Req_v6.0 2

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Attachment A-3 General Statement It is the intent of the Department to procure a
performance based contract(s) that promotes competition and provides best of
business services. To achieve this goal, the Department expects each servicer to
provide commercially available services that will yield high performing
portfolios and high levels of customer satisfaction. The following statements
apply: - Servicers will be required to meet all statutory and legislative
requirements. - Servicers will use their own discretion in deciding to provide
services or business functionality that is recommended but not required. -
Servicers may leverage all borrower repayment channels while maintaining
existing branding provided all federally held loans are clearly distinguished
and identified. - Small differences due to rounding in various calculations are
understood and accepted providing the calculation itself is in compliance with
federal regulation. - The department will allocate volume based on defined and
understood performance metrics. - The Department does not intend to provide
additional service level requirements. The Department does, however, expect best
of business practices to be deployed. - The Department will not require the use
of the Department or FSA logo on letters, web sites, etc. - Servicers will have
full discretion to promote or not promote services as long as they meet
legislative and regulatory requirements and are cost neutral to the government.
- Servicers will have discretion to provide services to schools. - Services may
use their own authentication process as long as the process is fully compliant
with federal IT security guidelines. - With regard to split borrowers, it is
acceptable for servicers to handle requests, phone calls, etc. for all loans
being serviced, regardless of the holder as long as all federal laws and
regulations are met. Full_Req_v6.0 3

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Attachment A-3 Direct Loans 1. The servicer shall meet all legislative and
regulatory requirements for the Direct Loan program (DL). In some cases Direct
Loans will need to be serviced differently than FFEL loans, a few examples of
these differences are listed below (not an all inclusive list): a. The interest
rate for a Federal Direct PLUS loan is fixed at 7.9% for loans first disbursed
after July 1, 2006. b. Public service loan forgiveness is only offered in the
DL. c. There are two repayment plans unique to the DL: Income Contingent
Repayment (ICR) and the Alternative Repayment. d. DL provides a 0.25% interest
rate reduction for borrowers making payments through electronic debit accounts.
e. As of July 1, 2009 the up front interest rebate for direct subsidized and
unsubsidized loans will be 1.00%. f. There is an origination fee but no Federal
default fee in the DL. As of July 1, 2009, the origination fee will be 1.5% for
direct subsidized and direct unsubsidized loans. g. There is authority in the DL
for unlimited discretionary forbearances. DL servicers must be able to offer
borrowers additional administrative forbearance after the 3-year limit and upon
receipt of additional documentation from the borrowers. 2. The servicer shall
meet all previously identified requirements for Federally Held Debt (i.e.
Accounting, Treasury, Reconciliation, Internal Controls, etc.) for the Direct
Loan portfolio. 3. The servicer shall interface with Common Origination and
Disbursement System (COD) & Electronic Master Promissory Note (eMPN) for newly
originated loans. 4. The servicer shall interface with the Direct Loan
Consolidation System (DLCS) for Direct Consolidation Loans. 5. The servicers
shall accept loan and disbursement level adjustments from the originating
system(s) and/or directly from schools as necessary. The majority of Direct Loan
adjustments & cancellations are passed from the school to COD, and then from COD
to the servicing system via the servicing system/COD interface. Direct
Consolidation Loan adjustments & cancellations are received by the servicing
system from the Direct Loan Consolidation System (DLCS) via the servicing
system/DLCS interface 6. The servicer shall interface with Internal Revenue
Service (IRS) as needed to support income contingent or income based programs.
7. The servicer shall support servicing of all Direct Loans, including Direct
Consolidation Loans. Full_Req_v6.0 4

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Attachment A-4 Ongoing Allocation Methodology The allocation of ongoing volume
will be determined based on the performance of each servicer in relation to the
other servicers awarded. While the total number of awarded servicers has not yet
been determined, this methodology works with any number of servicers (as shown
in examples). Quarterly scores will be compiled for each servicer based on
various performance factors; five high-level metrics, and some sub-metric
categories, have been defined (see below). An average of the quarterly scores
available on July 1 of each year will be used to determine the ranking of each
servicer in each of the five high-level metric categories. By combining each
servicer’s ranking in all categories, each servicer will be given a percentage
of the total new volume of Federally Held Debt to be distributed for the
upcoming year. Servicers will be informed of their allocation percentage of new
volume by July 15 of each year. This allocation will become effective on August
15 of each year. The first ongoing allocation will be provided by August 15,
2010. The allocation of ongoing volume will be determined based on the following
factors: 1. Percentage of “In Repayment” Portfolio Dollars that go into default
(as transferred to DMCS – 360+ days) – Measured as a percentage of the
servicer’s current Federally held portfolio a. Percentage at Public Schools b.
Percentage at Private Schools c. Percentage at Proprietary Schools 2. Percentage
of unique “In Repayment” Portfolio borrowers that go into default (as
transferred to DMCS – 360+ days) – Measured as a percentage of the servicer’s
current Federally held portfolio a. Percentage at Public Schools b. Percentage
at Private Schools c. Percentage at Proprietary Schools 3. Borrower Surveys a.
In School Borrowers b. In Grace Borrowers c. In Repayment Borrowers 4. School
Surveys a. Public Schools b. Private Schools c. Proprietary Schools 5. Survey of
FSA personnel Allocation Metric # 1 – to be measured Quarterly (calendar
quarters beginning with October 1, 2009). Calculation = (Total Principal Balance
Outstanding (or “PBO”) + Interest of all loans sent to DMCS during the quarter
or > 360 days delinquent at the end of the quarter) DIVIDED BY (Total PBO +
Interest of all of the servicer’s Federally held debt portfolio in repayment
status). Resulting value is a percentage rounded to the nearest hundredth for
each category of schools (Public, Private, Proprietary). All available quarterly
scores in each category (1a, 1b, 1c) will be averaged together on July 1 of each
year to calculate the Final Score for this allocation metric. Allocation Metric
# 2 – to be measured Quarterly (calendar quarters beginning with October 1,
2009). Calculation = (Total number of borrowers sent to DMCS during the quarter
or > 360 days delinquent at Page 1 of 3

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Attachment A-4 the end of the quarter) DIVIDED BY (Total number of borrowers
within the servicer’s Federally held debt portfolio in repayment status).
Resulting value is a percentage rounded to the nearest hundredth for each
category of schools (Public, Private, Proprietary). All available quarterly
scores in each category (2a, 2b, 2c) will be averaged together on July 1 of each
year to calculate the Final Score for this allocation metric. Allocation Metric
# 3 – Surveys will be conducted quarterly of borrowers in each category (In
School, In Grace, and In Repayment). The survey will measure borrower
satisfaction with the servicer and results will be based on a scale of 0 – 100%,
with 100% representing a perfect score. FSA, or an agent of FSA will conduct
surveys. All available quarterly scores in each category (3a, 3b, 3c) will be
averaged together on July 1 of each year to calculate the Final Score for this
allocation metric. Allocation Metric # 4 – Surveys will be conducted quarterly
of schools in each category (Public, Private, and Proprietary). The survey will
measure school satisfaction with the servicer and results will be based on a
scale of 0 – 100%, with 100% representing a perfect score. FSA, or an agent of
FSA will conduct surveys. All available quarterly scores in each category (4a,
4b, 4c) will be averaged together on July 1 of each year to calculate the Final
Score for this allocation metric. Allocation Metric # 5 – Surveys will be
conducted quarterly of FSA personnel. The survey will measure FSA satisfaction
with the servicer and results will be based on a scale of 0 – 100%, with 100%
representing a perfect score. FSA, or an agent of FSA will conduct surveys. All
available quarterly scores will be averaged together on July 1 of each year to
calculate the Final Score for this allocation metric. Allocation Metric Score
Comparison Among Servicers The above calculation will result in a set of 5
scores for each servicer, one score in each metric category (1-Defaulted
borrower dollars, 2-Defaulted borrower count, 3-Borrower Survey, 4-School
Survey, 5-FSA Survey). FSA will compare all servicers’ scores in each allocation
metric category and provide a ranking for each servicer in that category, with
the best score in each category receiving the highest possible value and the
worst score receiving the lowest possible value (highest / lowest values will be
determined by the number of servicers selected --- Highest score possible will
be the total number of servicers selected, lowest score will be 1). Once a
ranking value has been assigned to each servicer in each allocation category,
all scores for a servicer will be added together to provide the “Total Score”
for that servicer for the year. Each servicer will have one Total Score for each
year. Allocation of New Volume of Federally Held Debt Each servicer will be
assigned an allocation of new volume by dividing that servicer’s total score by
the combined total scores of all servicers. The resulting percentage will
determine each servicer’s percentage of new volume of Federally Held Debt. The
servicer’s percentage of new volume will determine the percentage of new
borrowers that will be sent to the servicer for servicing (loans for existing
borrowers may, to the maximum extent practicable, be sent to the servicer
already holding that borrower’s other loans). NOTE: If a servicer is out of
compliance (for example, but not limited to, financial management or reporting,
security, OMB Circular A-123, Legislative Mandates, Program Compliance, etc.),
that Page 2 of 3

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Attachment A-4 servicer’s new volume may be re-allocated to one or more other
servicers until compliance has been achieved. In addition, that servicer’s
current account volume may be transferred to another servicer, at the
non-compliant servicer’s expense. Page 3 of 3

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 1 - 6
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 12 3 456 1
Defaulted borrower count 1.10% 2.20% 3.30% 4.40% 5.50% 6.60% 2 Defaulted
borrower amount 1.10% 2.20% 3.30% 4.40% 5.50% 6.60% 3 Borrower Survey 97.00%
95.00% 93.00% 91.00% 90.00% 89.00% 4 School Survey 97.00% 95.00% 93.00% 91.00%
90.00% 89.00% 5 FSA Survey 97.00% 95.00% 93.00% 91.00% 90.00% 89.00% SERVICER
RANKING BY ALLOCATION METRIC Servicers METRIC 12 3 456 1 Defaulted borrower
count 6.0 5.0 4.0 3.0 2.0 1.0 2 Defaulted borrower amount 6.0 5.0 4.0 3.0 2.0
1.0 3 Borrower Survey 6.0 5.0 4.0 3.0 2.0 1.0 4 School Survey 6.0 5.0 4.0 3.0
2.0 1.0 5 FSA Survey 6.0 5.0 4.0 3.0 2.0 1.0 TOTAL SCORE BY SERVICER Servicers
12 3 456 TOTAL SCORE 30.0 25.0 20.0 15.0 10.0 5.0 ALLOCATION EACH SERIVER WILL
RECEIVE % of new volume New Servicer will receive borrowers (Total Score /
Combined (based on 6M Total Score Totals) total new borr) Servicer 1 30.0 28.57%
1,714,286 Servicer 2 25.0 23.81% 1,428,571 Servicer 3 20.0 19.05% 1,142,857
Servicer 4 15.0 14.29% 857,143 Servicer 5 10.0 9.52% 571,429 Servicer 6 5.0
4.76% 285,714 Combined Total 105 100.00% 6,000,000

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 2 - 5
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 12345 1
Defaulted borrower count 1.10% 2.20% 3.30% 4.40% 5.50% 2 Defaulted borrower
amount 1.10% 2.20% 3.30% 4.40% 5.50% 3 Borrower Survey 97.00% 95.00% 93.00%
91.00% 90.00% 4 School Survey 97.00% 95.00% 93.00% 91.00% 90.00% 5 FSA Survey
97.00% 95.00% 93.00% 91.00% 90.00% SERVICER RANKING BY ALLOCATION METRIC
Servicers METRIC 12345 1 Defaulted borrower count 5.0 4.0 3.0 2.0 1.0 2
Defaulted borrower amount 5.0 4.0 3.0 2.0 1.0 3 Borrower Survey 5.0 4.0 3.0 2.0
1.0 4 School Survey 5.0 4.0 3.0 2.0 1.0 5 FSA Survey 5.0 4.0 3.0 2.0 1.0 TOTAL
SCORE BY SERVICER Servicers 12345 TOTAL SCORE 25.0 20.0 15.0 10.0 5.0 ALLOCATION
EACH SERIVER WILL RECEIVE % of new volume New Servicer will receive borrowers
(Total Score / Combined (based on 6M Total Score Totals) total new borr)
Servicer 1 25.0 33.33% 2,000,000 Servicer 2 20.0 26.67% 1,600,000 Servicer 3
15.0 20.00% 1,200,000 Servicer 4 10.0 13.33% 800,000 Servicer 5 5.0 6.67%
400,000 Combined Totals 75 100.00% 6,000,000

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 3 - 4
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 1234 1
Defaulted borrower count 1.10% 2.20% 3.30% 4.40% 2 Defaulted borrower amount
1.10% 2.20% 3.30% 4.40% 3 Borrower Survey 97.00% 95.00% 93.00% 91.00% 4 School
Survey 97.00% 95.00% 93.00% 91.00% 5 FSA Survey 97.00% 95.00% 93.00% 91.00%
SERVICER RANKING BY ALLOCATION METRIC Servicers METRIC 1234 1 Defaulted borrower
count 4.0 3.0 2.0 1.0 2 Defaulted borrower amount 4.0 3.0 2.0 1.0 3 Borrower
Survey 4.0 3.0 2.0 1.0 4 School Survey 4.0 3.0 2.0 1.0 5 FSA Survey 4.0 3.0 2.0
1.0 TOTAL SCORE BY SERVICER Servicers 1234 TOTAL SCORE 20.0 15.0 10.0 5.0
ALLOCATION EACH SERIVER WILL RECEIVE % of new volume New Servicer will receive
borrowers (Total Score / Combined (based on 6M Total Score Totals) total new
borr) Servicer 1 20.0 40.00% 2,400,000 Servicer 2 15.0 30.00% 1,800,000 Servicer
3 10.0 20.00% 1,200,000 Servicer 4 5.0 10.00% 600,000 Combined Totals 50 100.00%
6,000,000

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 4 - 3
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 12 3 1
Defaulted borrower count 1.10% 2.20% 3.30% 2 Defaulted borrower amount 1.10%
2.20% 3.30% 3 Borrower Survey 97.00% 95.00% 93.00% 4 School Survey 97.00% 95.00%
93.00% 5 FSA Survey 97.00% 95.00% 93.00% SERVICER RANKING BY ALLOCATION METRIC
Servicers METRIC 12 3 1 Defaulted borrower count 3.0 2.0 1.0 2 Defaulted
borrower amount 3.0 2.0 1.0 3 Borrower Survey 3.0 2.0 1.0 4 School Survey 3.0
2.0 1.0 5 FSA Survey 3.0 2.0 1.0 TOTAL SCORE BY SERVICER Servicers 12 3 TOTAL
SCORE 15.0 10.0 5.0 ALLOCATION EACH SERIVER WILL RECEIVE % of new volume New
Servicer will receive borrowers (Total Score / Combined (based on 6M Total Score
Totals) total new borr) Servicer 1 15.0 50.00% 3,000,000 Servicer 2 10.0 33.33%
2,000,000 Servicer 3 5.0 16.67% 1,000,000 Combined Totals 30 100.00% 6,000,000

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 5 - 2
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 12 1
Defaulted borrower count 1.10% 2.20% 2 Defaulted borrower amount 1.10% 2.20% 3
Borrower Survey 97.00% 95.00% 4 School Survey 97.00% 95.00% 5 FSA Survey 97.00%
95.00% SERVICER RANKING BY ALLOCATION METRIC Servicers METRIC 12 1 Defaulted
borrower count 2.0 1.0 2 Defaulted borrower amount 2.0 1.0 3 Borrower Survey 2.0
1.0 4 School Survey 2.0 1.0 5 FSA Survey 2.0 1.0 TOTAL SCORE BY SERVICER
Servicers 12 TOTAL SCORE 10.0 5.0 ALLOCATION EACH SERIVER WILL RECEIVE % of new
volume Servicer will receive New borrowers (Total Score / Combined (based on 6M
total Total Score Totals) new borr) Servicer 1 10.0 66.67% 4,000,000 Servicer 2
5.0 33.33% 2,000,000 Combined Totals 15 100.00% 6,000,000

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 6 - 6
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 12 3 456 1
Defaulted borrower count 1.10% 2.20% 3.30% 4.40% 5.50% 6.60% 2 Defaulted
borrower amount 6.60% 5.50% 3.30% 4.40% 2.20% 1.10% 3 Borrower Survey 97.00%
95.00% 93.00% 91.00% 90.00% 89.00% 4 School Survey 89.00% 90.00% 93.00% 91.00%
95.00% 97.00% 5 FSA Survey 97.00% 95.00% 93.00% 91.00% 90.00% 89.00% SERVICER
RANKING BY ALLOCATION METRIC Servicers METRIC 12 3 456 1 Defaulted borrower
count 6.0 5.0 4.0 3.0 2.0 1.0 2 Defaulted borrower amount 1.0 2.0 4.0 3.0 5.0
6.0 3 Borrower Survey 6.0 5.0 4.0 3.0 2.0 1.0 4 School Survey 1.0 2.0 4.0 3.0
5.0 6.0 5 FSA Survey 6.0 5.0 4.0 3.0 2.0 1.0 TOTAL SCORE BY SERVICER Servicers
12 3 456 TOTAL SCORE 20.0 19.0 20.0 15.0 16.0 15.0 ALLOCATION EACH SERIVER WILL
RECEIVE % of new volume New Servicer will receive borrowers (Total Score /
Combined (based on 6M Total Score Totals) total new borr) Servicer 1 20.0 19.05%
1,142,857 Servicer 2 19.0 18.10% 1,085,714 Servicer 3 20.0 19.05% 1,142,857
Servicer 4 15.0 14.29% 857,143 Servicer 5 16.0 15.24% 914,286 Servicer 6 15.0
14.29% 857,143 Combined Total 105 100.00% 6,000,000

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 7 - 5
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 12345 1
Defaulted borrower count 1.10% 2.20% 3.30% 4.40% 5.50% 2 Defaulted borrower
amount 6.60% 5.50% 3.30% 4.40% 2.20% 3 Borrower Survey 97.00% 95.00% 93.00%
91.00% 90.00% 4 School Survey 89.00% 90.00% 93.00% 91.00% 95.00% 5 FSA Survey
97.00% 95.00% 93.00% 91.00% 90.00% SERVICER RANKING BY ALLOCATION METRIC
Servicers METRIC 12345 1 Defaulted borrower count 5.0 4.0 3.0 2.0 1.0 2
Defaulted borrower amount 1.0 2.0 4.0 3.0 5.0 3 Borrower Survey 5.0 4.0 3.0 2.0
1.0 4 School Survey 1.0 2.0 4.0 3.0 5.0 5 FSA Survey 5.0 4.0 3.0 2.0 1.0 TOTAL
SCORE BY SERVICER Servicers 12345 TOTAL SCORE 17.0 16.0 17.0 12.0 13.0
ALLOCATION EACH SERIVER WILL RECEIVE % of new volume New Servicer will receive
borrowers (Total Score / Combined (based on 6M Total Score Totals) total new
borr) Servicer 1 17.0 22.67% 1,360,000 Servicer 2 16.0 21.33% 1,280,000 Servicer
3 17.0 22.67% 1,360,000 Servicer 4 12.0 16.00% 960,000 Servicer 5 13.0 17.33%
1,040,000 Combined Total 75 100.00% 6,000,000

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 8 - 4
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 1234 1
Defaulted borrower count 1.10% 2.20% 3.30% 4.40% 2 Defaulted borrower amount
6.60% 5.50% 3.30% 4.40% 3 Borrower Survey 97.00% 95.00% 93.00% 91.00% 4 School
Survey 89.00% 90.00% 93.00% 91.00% 5 FSA Survey 97.00% 95.00% 93.00% 91.00%
SERVICER RANKING BY ALLOCATION METRIC Servicers METRIC 1234 1 Defaulted borrower
count 4.0 3.0 2.0 1.0 2 Defaulted borrower amount 1.0 2.0 4.0 3.0 3 Borrower
Survey 4.0 3.0 2.0 1.0 4 School Survey 1.0 2.0 4.0 3.0 5 FSA Survey 4.0 3.0 2.0
1.0 TOTAL SCORE BY SERVICER Servicers 1234 TOTAL SCORE 14.0 13.0 14.0 9.0
ALLOCATION EACH SERIVER WILL RECEIVE % of new volume New Servicer will receive
borrowers (Total Score / Combined (based on 6M Total Score Totals) total new
borr) Servicer 1 14.0 28.00% 1,680,000 Servicer 2 13.0 26.00% 1,560,000 Servicer
3 14.0 28.00% 1,680,000 Servicer 4 9.0 18.00% 1,080,000 Combined Total 50
100.00% 6,000,000

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 9 - 3
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 12 3 1
Defaulted borrower count 1.10% 2.20% 3.30% 2 Defaulted borrower amount 6.60%
5.50% 3.30% 3 Borrower Survey 97.00% 95.00% 93.00% 4 School Survey 89.00% 90.00%
93.00% 5 FSA Survey 97.00% 95.00% 93.00% SERVICER RANKING BY ALLOCATION METRIC
Servicers METRIC 12 3 1 Defaulted borrower count 3.0 2.0 1.0 2 Defaulted
borrower amount 1.0 2.0 3.0 3 Borrower Survey 3.0 2.0 1.0 4 School Survey 1.0
2.0 3.0 5 FSA Survey 3.0 2.0 1.0 TOTAL SCORE BY SERVICER Servicers 12 3 TOTAL
SCORE 11.0 10.0 9.0 ALLOCATION EACH SERIVER WILL RECEIVE % of new volume New
Servicer will receive borrowers (Total Score / Combined (based on 6M Total Score
Totals) total new borr) Servicer 1 11.0 36.67% 2,200,000 Servicer 2 10.0 33.33%
2,000,000 Servicer 3 9.0 30.00% 1,800,000 Combined Total 30 100.00% 6,000,000

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Attachment A-5 SAMPLE - ONGOING ALLOCATION METRIC CALCULATION Scenario 10 - 2
Servicers selected FINAL SCORE BY ALLOCATION METRIC Servicers METRIC 12 1
Defaulted borrower count 1.10% 2.20% 2 Defaulted borrower amount 6.60% 5.50% 3
Borrower Survey 97.00% 95.00% 4 School Survey 89.00% 90.00% 5 FSA Survey 97.00%
95.00% SERVICER RANKING BY ALLOCATION METRIC Servicers METRIC 12 1 Defaulted
borrower count 2.0 1.0 2 Defaulted borrower amount 1.0 2.0 3 Borrower Survey 2.0
1.0 4 School Survey 1.0 2.0 5 FSA Survey 2.0 1.0 TOTAL SCORE BY SERVICER
Servicers 12 TOTAL SCORE 8.0 7.0 ALLOCATION EACH SERIVER WILL RECEIVE % of new
volume New Servicer will receive borrowers (Total Score / Combined (based on 6M
Total Score Totals) total new borr) Servicer 1 8.0 53.33% 3,200,000 Servicer 2
7.0 46.67% 2,800,000 Combined Total 15 100.00% 6,000,000

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Federal Student Aid Attachment A-6-- Servicing Pricing Definitions U.S.
Department of Education Title IV Student Loan Servicing/Management Deliverable
Definition Borrowers in In-school Status Number of unique borrowers (SSNs) with
balance not equal to $0.00 who have not separated from school as of the last day
of the billing period Borrowers in Grace or Current Number of unique borrowers
(SSNs) with balance not Repayment Status equal to $0.00 who have separated from
school and are less than 31 days delinquent and are not in deferment,
forbearance, or conditionally discharged as of the last day of the billing
period Borrowers in Deferment or Number of unique borrowers (SSNs) with balance
not Forbearance equal to $0.00 who have separated from school, are in deferment
or forbearance and who are not conditionally discharged as of the last day of
the billing period Borrowers 31-90 Days Number of unique borrowers (SSNs) with
balance not Delinquent equal to $0.00 who have separated from school, are 31 or
more days, but less than 91 days delinquent, and who are not conditionally
discharged as of the last day of the billing period Borrowers 91-150 Days Number
of unique borrowers (SSNs) with balance not Delinquent equal to $0.00 who have
separated from school, are 91 or more days, but less than 151 days delinquent,
and who are not conditionally discharged as of the last day of the billing
period Borrowers 151-270 Days Number of unique borrowers (SSNs) with balance not
Delinquent equal to $0.00 who have separated from school are 151 or more days,
but less than 271 days delinquent, and who are not conditionally discharged as
of the last day of the billing period Borrowers 270+ Days Number of unique
borrowers (SSNs) with balance not Delinquent equal to $0.00 who have separated
from school and 271 or more days and who are not conditionally discharged as of
the last day of the billing period. This may include borrowers over 360 day that
are considered in Default Status, but for some reason have not been transferred
through no fault of the Servicer. NOTES: 1. Common pricing shall apply
regardless of program (i.e. Direct Loan, Federal Family Education Loan) or
volume serviced, unless otherwise noted in the contract. 2. Reporting is
required for the number of borrowers and/or loans and dollar amount of each
program, in addition to any other reporting requirements provided in the
contract. 3. Borrowers in multiple statuses shall be billed once, in the lowest
performing deliverable status. The lowest performing deliverable status is
defined as the lowest unit priced deliverable. 4. Borrowers pending discharge,
which include, but are not limited to: conditional disability, death, or
bankruptcy, shall be, for billing purposes, counted in the deliverable status at
the time of the discharge request. 5. “The last day of the billing period" is
defined as the last day of the Department of Education’s monthly billing period.
6. The annual pricing period shall begin on September 1, 2009. Version 9.0 Page
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