Here is a link to the 32 page document with Questions & Answers to the Phase II Solicitation for the Direct Loan Servicing contract currently up for grabs.
Here is the General Statement provided by the Department with the core principles for this contract which includes allocation of volume based on performance metrics (which have yet to be determined):
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 the potential servicers to provide a commercially available service
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 (may) but not required (must, shall).
• 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
allocation metrics which will be provided at a later date.
• 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 letterhead,
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.
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Here were a few questions and answers that stood out:
- Timeline for contract award:
process?
A: In addition to the projected timeline provided in Phase I, additional projected
milestone dates for the acquisition process will be provided with the Phase II
solicitation package (note: Phase II solicitation package not posted on website).
- Guaranty agencies expected to continue to offer default aversion services:
(8) Q: Does the Department anticipate that any or all of the Guaranty Agency default
aversion services currently performed for FFELP borrowers will be required or
optional services on FFELP “put” loans? For example, special default aversion
material, programs, management tools could be provided to schools with cohort
default rates that exceed a certain threshold
A: Yes, default aversion activities similar to those currently performed by
Guaranty Agencies would be expected for successful performance.
- Low-cost key to selection criteria:
handled in the evaluation?
A: The Department will evaluate proposals based on best-value.
- Timing of servicer involvement:
A: Once servicing of those loans types is implemented, the loans will require servicing after a disbursement has been submitted through the origination system. Subsequent disbursements will be passed to the servicer as received.
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