Go With The Flows:
Identifying the FFELP process flow that is
right for your institution
Presented by:
Julie Meyer and Stephanie Wilson
Missouri Department of Higher Education
MASFAP spring 2006
1
Agenda
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
Players and roles
Definitions
Comparison of application flow options
Suggestions for how to determine which
flow is right for your school and
borrowers
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Who Are The Players?

The role of the school

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Determines its processes and
partners/vendors (the decision maker)
The role of the lender or disbursing
agent


Approves the prom note for disbursement
Disburses funds according to the school’s
instructions
MASFAP spring 2006
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Who Are The Players?

The role of the guarantor

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Provides insurance for the loan
Is required to pay its Federal Fund a 1%
default fee for loans guaranteed
The role of the servicer

Administers repayment processes
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Definitions

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Process flow: The path a loan follows; the
steps involved in applying for a loan
Origination: “Front-end” processes involved in
making a new loan; includes

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School certification
Borrower processes, such as signing the prom
note

Guarantee and approval processes

Disbursement processes
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Definitions
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CommonLine: Industry initiative to develop
and use common file layouts, terms, and
processes
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Most commonly used version is CL4
Common Record: CommonLine (CRC) currently
being tested and piloted within the industry
Types of files:
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App send
Change send
Response
Disbursement-related
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Definitions


School-initiated process: School initiates the
loan application by sending one of the
following to the guarantor:

CommonLine application send file

School certification via the web

Paper certification
Borrower-initiated process: Borrower initiates
the loan application via the web or telephone
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Definitions

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Guarantor flow: Loan data is sent to the
guarantor first. The guarantor then
notifies the lender, servicer, and/or
disbursing agent.
Lender flow: Loan data is sent to the
lender first. The lender then notifies the
guarantor.
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Definitions

Guarantee and print (GP): School certifies the
loan and sends a complete loan record to the
guarantor. If non-serial, borrower must then sign
a prom note electronically or via paper.

Print and guarantee (PG): School sends a
partial loan record to the guarantor. Borrower
must complete missing information in order to
guarantee the loan.
MASFAP spring 2006
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Definitions

Guarantee only (GO): All necessary

Other flows
information is provided before submitting
for the guarantee, including prom note
signature if non-serial.
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Print only (PO)
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Credit only (CO)
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Etc.
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What are the processing
flow options?
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School-Initiated Guarantor GP Flow
1.
2.
3.
4.
School certifies loan via CL app send
file or via web
Guarantor guarantees loan and
forwards information to lender and/or
disbursing agent
Non-serial borrowers complete prom
note via paper or web
Disbursing agent approves loan for
disbursement
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School-Initiated Guarantor GP Flow
1 School certifies loans;
sends certification to
guarantor
2 Guarantor guarantees
loans; forwards
information to lenders
5 Lenders notify
guarantor of promissory
note approval
MASFAP spring 2006
3 If new borrower:
lenders request
signed prom note
4 New borrowers sign
promissory note,
return to lenders
(paper or electronic)
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School-Initiated Guarantor GP Flow
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Recommended for schools:
With sophisticated FAM Systems that are
able to generate and send CommonLine
App Send files
<OR>
 That can provide most or all of the
information needed to guarantee the loan
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Borrower/student name, SSN, DOB, etc.
School, lender, and guarantor information
Loan type and certification amount
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School-Initiated Guarantor PG Flow
1.
2.
3.
4.
School submits loan information via CL
app send file or via web
Borrower completes application and
prom note via paper or web
Guarantor guarantees the loan and
notifies the lender and/or disbursing
agent
Disbursing agent approves loan for
disbursement
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School-Initiated Guarantor PG Flow
1 School submits loan
information to guarantor
2 Guarantor prints &
mails prom note OR
makes available for
e-sign on the web
3 Borrowers provide
missing information
(provide lender, sign
promissory note, pass
credit check, etc.)
4 Guarantor
guarantees loans
5 Guarantor
notifies lender
or disbursing
agent
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School-Initiated Guarantor PG Flow

Recommended for schools:
With FAM Systems that are able to generate and
send CL App Send files
<OR>
 PLUS loans or other loans not yet credit approved
<OR>
 That cannot provide all of the information needed
to guarantee the loan

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Borrower or student info not complete
Lender or guarantor not known
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School-Initiated Guarantor GO Flow
1.
2.
3.
School provides all necessary loan
information via CL app send file or via
web
Guarantor guarantees loan
Disbursing agent approves loan for
disbursement (if valid prom note on
file)
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School-Initiated Guarantor GO Flow

Recommended for schools:
Gathering all FFELP loan information at the time of
packaging/awarding (e.g., lender)
<OR>
 With a large serial population
<OR>
 Using loan types not requiring a credit check
<OR>
 Using the web for online entry and real-time
guarantee

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School-Initiated Lender Flow
1.
2.
3.
School certifies loan via CL app send
file or via lender’s web product
Non-serial borrowers complete prom
note via paper or via lender’s e-sign
process
Lender/disbursing agent:


submits loan information to guarantor
approves loan for disbursement
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School-Initiated Lender Flow
1 School initiates loans
with lender
2 Lender makes loan
available to borrower
online
3 Borrower completes
– credit check
performed, prom note
signed
4 Lender notifies
guarantors of loan
and prom note
approval
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School-Initiated Lender Flow
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Recommended for schools:

Partnering strongly with one or two lenders; using
that lender’s web loan delivery product



ELM
Credit checks
E-sign
<OR>
 That can provide most or all of the information
needed to guarantee the loan



Borrower/student name, SSN, DOB, etc.
School, lender, and guarantor information
Loan type and certification amount
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Borrower-Initiated Lender Flow
1.
Borrowers apply for loans via lender’s
website


2.
3.
4.
Credit check performed
Application signed electronically
Lender sends school cert request; school
certifies
Lender/disbursing agent submits loan for
guarantee
Lender/disbursing agent disburses loan
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Borrower-Initiated Lender Flow
1 Borrowers apply for
loans via lender’s
website
3 School certifies
online or via CL app
send file
2 Lender requests school
certification
4 Lenders notify
guarantor of loan
and prom note
approval
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Borrower-Initiated Lender Flow
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Recommended for schools:

Strongly partnered with one lender or
disbursing agent; school may be:

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Using one lender with multiple guarantors
Using lender’s web loan delivery product
ELM
<OR>
 Heavily using PLUS or other loan types
requiring credit checks
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How do I determine which
flow is right for my school?
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Factors to Consider

How much information does my school
gather at the time of awarding?

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Is the lender always known?
Is the requested amount known?
Are credit checks a part of the
application process?

Are credit approval rates generally high or
low?
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Factors to Consider

How reliant is my school on its FAMS? Is
my FAMS capable of supporting
CommonLine 4 (or 5)?


Many vendors no longer support CL3
Common Record: CommonLine (CRC) still
being piloted
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Factors to Consider

How web-savvy is my student and/or
parent population? Are they willing to:


Initiate or complete an application and/or
credit check on the web?
E-sign?
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Factors to Consider

Which vendor(s) does my school want
to work with based on borrower
benefits or other factors?
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ELM
Private loan borrowing
Upfront fees
Rate relief programs during repayment
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Thank you for your time and
attention!
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