Student Lending


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Student Lending

  1. 1. Student Lending: Optimizing the Online Application Heidi Kovalick Associate Director, Student Lending Higher Education Student Assistance Authority November 10, 2011
  2. 2. What is NJCLASS?• State statutory supplemental loan program created in 1991 for NJ residents and non- residents attending NJ colleges• Funded through the sale of tax-exempt municipal bonds• Independent State Authority• Competitive environment of private education loans• Approve 28,000 applications, $350M, per year
  3. 3. In The Beginning…• Online application and credit decision, with print to sign requirements• Up to 5 signatures on the Credit App, 4 on the Pnote + 2 underwriter signatures• #1 customer error: missing/incorrect signatures• #1 staff error: lost/misfiled documents
  4. 4. Application Process• Secure Online Loan Approval Disbursement Application • Data file of Loan• All parties view TILA Elements sent to application • Underwriting staff reviews documents Trustee’s Document disclosure Custody • TILA Predisb and security edits Disclosure mailed to• Borrower completes • Promissory Notes TILA Self-Cert • School certifies all parties 15 days student’s eligibility sent to Doc Custody prior• Credit decision is • Doc Custody review presented • TILA Loan Offer • Disb file sent to Disclosure is and acceptance of Trustee• All Parties Sign & mailed to all Notes submit App &P- • File is compared to parties, and Doc Custody on Note available on web hand • Borrower accepts • Disbursements sent TILA Loan Offer Document to schools Application Custody
  5. 5. The Challenge • A paper process with 11 max signatures • 28,000 apps/year • 9 FTEs + 4 temps • Overtime, including Saturdays • Customer complaints • Lost volume due to processing timeframes • Space constraints
  6. 6. By the numbers… 1,950 applications per week 2 Full-time credit reviewers 24-hour turnaround expected ≈ 28 applications must be reviewed per hour 2.15 minutes to review each application
  7. 7. Why eSign?• Competition in the student loan market• Customer expectationsHOW?• Cost analysis• Risk analysis• Product demonstrations• Reference checks
  8. 8. Requirements• Meet the federal eSign Act• Meet federal and state UETA• Ensure nonrepudiation –enforceability of Note• Ability to transfer Notes to Trustee• Ease of use• Customizable across our product lines
  9. 9. Meet the Resistors…• Paper Tigers- – Paper degrades, these are 30-year Notes – Storage costs – Ink signatures are not proof of authenticity• Alarmists- – Authentication – Attribution – Playback – Reference checks – Familial fraud cannot be prevented with an ink signature
  10. 10. Benefits• Protection of PII – No more file folders moving around the office• Reduced Labor Costs – Eliminated all overtime and the need for temp staff• Improved Employee Satisfaction – Staff could have vacation during summer peak – Got to work with new technology• Improved Customer Service – From 15 business days → 24 hours (or less!)• Space Reclamation – No more filing cabinets
  11. 11. Pleasant Surprises…• Adoption Rate – From 0 → 99.9% in one day – 335 apps first day, 2 print to sign• Amount of internal benefit we realized• How quickly the resistors fell in love – Process Replayer
  12. 12. Challenges• Technology – involve the right staff – Server-based v. Mainframe DB2 – Clustered servers – Security certificates – Performance tuning & stress test (not yours!)• Operational – Need to manually transfer Notes to our Trustee – Staff Training
  13. 13. A Word of Advice• Allow enough time for development, testing, and training• Get the legal advisor(s) involved early• Expect the unexpected• Build the right team – Business subject matter experts – Technology group – Legal and compliance
  14. 14. Questions? Call, click, or email Heidi Kovalick 609-588-3220