<June04Update>

Transition News

Our company officially changed its name to Campus Partners on June 1, 2004 . We invited several local customers to help us celebrate our name change, and Yvonne Mitchell from NC State A&T University and Fern Johnson from Winston-Salem State University even helped us with our Ribbon Cutting Celebration in the Call Center. Owners Paul Carey, Chairman of the Board of Campus Partners, and Michael Carey, President of Campus Partners, also were on hand to celebrate the name change with customers and staff. (To learn more about Mike and his vision for the company, please see this month’s “Inside Campus Partners.”)

The day was also exciting because we launched two new products-E-Bill and Cohort Right Track that day as well. They joined a third new product, eXpressReports, which was introduced the week before.

We recently sent another President’s letter outlining our most recent transition activities and product development plans to decision-makers at each campus. Please see the following attachment for the complete text of the letter.

COHEAO Announces Teleconference on Reauthorization

Campus Partners will participate in COHEAO’s teleconference on reauthorization of the Higher Education Act, which will be held on July 1, 2004 from 2:00 to 3:30 p.m. ET. James Bergeron, Legislative Assistant for Education Issues for Rep. Buck McKeon, the Chairman of the Subcommittee on Postsecondary Education of the House Committee on Education and the Workforce will be participating. This Subcommittee has jurisdiction over the student financial assistance sections of the Higher Education Act, including all of Title IV. Also participating will be Harrison Wadsworth, COHEAO Executive Director, who has been co-leading the COHEAO reauthorization initiatives. The session will offer participants an opportunity to hear directly about the status of the controversial Higher Education Act proposals, including information on the major reauthorization legislation, H.R. 4283. The cost to participate is $75.00 for members (per site) and $100 for non-members (per site). You may register for the teleconference on line at www.coheao.org.

Master Promissory Note Question and Answer Guide

As previously published, colleges and universities must begin using the Master Promissory Note (MPN) for all Federal Perkins loans on November 1, 2004. We recently developed a Question and Answer Guide to help you make the transition to the MPN if you have not already done so. The Question and Answer Guide is provided as an attachment below and is also available in html format at .

We will also be introducing iPROMise, our Web based entrance interview and Master Prom Note product, in July. iPROMise will allow your Federal Perkins loan borrowers to complete their entrance interview on-line and e-sign their MPN. Future enhancements will include the availability of the Truth-in-Lending Disclosures online, automatic update of new loans and advances, and MPNs for HHS loans. (See related article below.)

In this month’s Update, we have included a “How to” on signing up for and using iPROMise.

The Bureau of Health Professions published Campus-Based Policy Memorandum 2004-2 with guidelines for issuing and administering Master Promissory Notes for the Health Professions Student Loan/Primary Care Loan, Loans for Disadvantaged Students, and Nursing Student Loan programs. It may be used for awards beginning July 1, 2004. This guidance does not replace the policy direction provided under current policy guidance for Electronic Promissory Notes with Electronic Signature.

To view this memorandum, go to http://bhpr.hrsa.gov/dsa/weblinks. Click on “Program Information,” then “Office for Campus Based Programs (OCBP) Policy Memorandum.”

Institutions can now update their Division of Health Careers Diversity and Development (DHCDD) contact person information on-line. The person designated by the institution as the DHCDD contact receives all mail (electronic and paper) from DHCDD and is responsible for forwarding program mailings to the appropriate office and individuals within the institution and will be responsible for ensuring the return of materials.

ED has created a helpful Web-based tutorial called “Conquering the Fear of the FISAP.” This interactive training tool walks you through the various parts of the Fiscal Operations Report and Application to Participate and can be done at your own pace whenever you have the time. The tutorial can be found at http://cbfisap.sfa.ed.gov/CBSWebApp/tutorial/index.htm.

Thanks so much to Janie Burton at Furman University for bringing this to our attention.

FISAP Report Update

Campus Partners has completed the required changes to the Fiscal Operations Report for 2003-2004. The changes described below will be reflected in the June 30, 2004 report.

Part III, Fund Activity during the 2003-2004 Year
Line 8 has been added that states, “Total Principal repaid by borrowers from all sources during the 2003-2004 Award Year for loans in default for more than 2 years up to 5 years.’ Field 8(a) will be the number of borrowers for Line 8 and Field 8(b) will be the year to date principal paid for 8(a).”

Line 9 has been added that states, “Total Principal repaid by borrowers from all sources during the 2003-2004 Award Year for loans in default for more than 5 years.’ Field 9(a) will be the number of borrowers for Line 9 and Field 9(b) will be the year to date principal paid for 9(a).”

Part III, Section C, Cumulative Repayment Information as of June 30, 2004
A line has been added to that states: “(Note: Field 2 equals the sum of field 2.1 plus 2.2).”

The Other ReFi Boom

Just when you thought interest rates couldn’t go lower, on July 1, federal student loan rates will drop to 2.77% for Stafford loan borrowers who have just graduated this spring. This pretty much guarantees that the market for Federal Consolidation Loans will continue to thrive as borrowers scramble to lock in these extraordinarily low rates.

The formula for determining a Federal Consolidation Loan interest rate is to take the weighted average interest rate of the loans the borrower wishes to consolidate and rounding up to the nearest 1/8%. So, for example, if a borrower has only Stafford loans disbursed since July 1, 1998 in a grace status, on July 1 the rate will reset to 2.77% and the fixed rate on a new consolidation loan would be 2.875%. That’s 2.875% for the life of the loan - which can be up to 30 years depending on the borrower’s level of indebtedness.

*Assumes the consolidation loan is made up of only Stafford or only of PLUS loans

Although the terms of a Federal Consolidation Loan are federally regulated, a number of lenders offer “borrower benefits” to encourage borrowers to consolidate with them. And, these incentives can save borrower hundreds, even thousands of dollars in interest expense. Most common is a .25% interest rate discount when borrowers agree to repay their new consolidation loans electronically (direct debit). Some lenders offer a more significant discount when borrowers make timely monthly payments on their new consolidation loans. For example, Student Trust offers a 1% interest rate reduction after the borrower has made the first 36 consolidation loan payments on time. That means that a borrower with a consolidation loan interest rate of 2.875% could reduce the rate to as low as 1.625% fixed after three years of repayment.

And there are other advantages to federal student loan consolidation. With extended repayment and graduated repayment options, borrowers’ monthly payments can be reduced by 50% or more – especially helpful to recent graduates trying to make ends meet. And, if a borrower has multiple lenders and multiple monthly payments, consolidation lets the borrower make a single and (generally) a lower payment to a single lender – simplifying bill payment and improving cash flow. Finally, federal student loan consolidation is free – there are no fees to consolidate.

Most consolidations are completed in 45-60 days, as the underlying loans are paid off to create the new consolidation loan. This timeframe increases a bit during “peak,” June through October, as the year’s new graduates race to consolidate their loans during their grace periods to take advantage of the Stafford .6% rate reduction available during grace and deferment periods.

Borrowers interested in loan consolidation have different goals for consolidating and different concerns. The highly trained staff at AES/PHEAA works closely with each borrower to answer all their questions and ensure a smooth transition. For example, a Perkins loan borrower who expresses interest in maintaining the loan’s cancellation benefits will be counseled to leave that loan out of the consolidation.

Federal student loan consolidation may be the most attractive financial product recent graduates are ever offered. Lower initial payments can help them manage their money as they are building their careers, and locking in today’s interest rates can help lower the total cost of their education.

Student Trust partners with alumni associations and other groups to create custom student loan consolidation programs that offer this valuable benefit to members. To learn how Student Trust can create a custom program for your school, call Mark Jacobs, National Sales Director for Student Trust, at 301.545.0715 x37.

Third-Party Compliance Audit in Process

Our third-party compliance audit, conducted by PricewaterhouseCoopers, LLP, for the fiscal year ending June 30, 2004 is currently underway. We expect their audit report to be published and available to you in early August. Please stay tuned to the Update for more information. Audit request forms for 2004 are currently available from our Web site.

Credit Counseling Referrals

Campus Partners has entered into a partnership with Money Management International (MMI) to provide credit counseling and other valuable solutions for debt-weary borrowers. In November 2003, Campus Partners began referring borrowers to MMI if they told us that collectors constantly call them or if they told us they recently had a life-changing event (e.g. unemployment, divorce, etc.) or if we see a pattern in the account history of repeated delinquency.

Since November, we have referred over one hundred borrowers to MMI. Every borrower referred to MMI receives free counseling over the phone, as well as a link to the MMI website (www.moneymanagement.org). They also may choose to enroll in a debt management program (DMP). In May, MMI set up the first borrower for a DMP from a Campus Partners referral. Once the borrower is referred to MMI, it takes approximately 45 days to complete the application and set the borrower up on the debt management program.

With a little more than six months experience, we have found that some of our borrowers qualify for or could benefit from MMI’s array of services. Our goal is to provide as many avenues as possible to help borrowers who may need assistance with their finances. We believe our partnership with MMI is a win-win situation for many of our borrowers. It’s exciting to provide borrowers with options that ease the burden of their financial responsibilities.

Student Loans 101 Scheduled for July 8-9

Students Loans 101, our workshop for less experienced student loan administrators or those new to Campus Partners, will be offered for the final time this year on July 8-9, 2004 in Winston-Salem. We had a full class in March so be sure to register now if you want to attend.

If you are interested in registering for the workshop, please contact Debra Pitts at 1-800-458-4492, ext. 2272 or via e-mail at dpitts@campuspartners.com. Forms for the workshop are available online by clicking here.

Teleconference Schedule

Thinking about participating in one of our teleconferences, but don’t know how to sign up? Just e-mail Debra Pitts at dpitts@campuspartners.com at least three days before the scheduled teleconference to register. She will notify you of the telephone number that you need to call in a return e-mail. It’s free and is well worth your time to learn moreabout different aspects of servicing student loans.

Offering this training gives us the opportunity to reach student loan administrators who cannot attend a Student Loans 101 or 202 session in Winston-Salem. Each teleconference is geared towards understanding a particular topic and is an opportunity to gain new insights, ask questions of Campus Partners staff, and hear helpful suggestions from other schools.

Regional Meetings

Join us at one of our Regional Meetings this year held at campuses across the country. You’ll have a chance to find out the latest information from your School Relations Coordinator and share insights with other student loan administrators in your area. If you are interested in hosting a meeting on your campus, please contact your School Relations Coordinator.

Second Alliance Collections is presenting the Cruisin’ to Collections Conference on July 9-12 . More information is available at http://www.secondalliance.com/index.htm.

The University of Washington is hosting the PAC-10 Conference on July 18-21 at the Shilo Inn, Ocean Shores, WA. The number for the hotel is 360-289-4600.

The COHEAO Mid-Year Meeting will be held August 1-3 at the Loews Philadelphia Hotel in Philadelphia, PA. The phone number for the hotel is 215-627-1200. More information is available at www.coheao.org.