Union Federal is a federally registered trademark of Union Federal Savings Bank used by SunTrust Bank under license. The Union Federal Private Student Loan is funded by SunTrust Bank and is not affiliated with any other lender, including Union Federal Savings Bank. Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue these programs without notice. All loan programs may not be available in certain jurisdictions. SunTrust is a federally registered service mark of SunTrust Banks, Inc.
March 5, 2015 Mark Zaffalon Office of Financial Aid SUNY Fredonia 280 Central Avenue, 206 Mayhum Hall Fredonia, NY 14063 Dear Mark, We are pleased to respond to SUNY Fredonia’s Request for Information for private student loan providers. The Union Federal® Private Student Loan offers both fixed and variable rate pricing, competitive borrower benefits, and the ability for students and families to customize their loan options. This customized experience allows borrowers to select the repayment term, repayment option, and loan amount that best meet their unique financing needs. Families truly enjoy the experience of being able to tailor their options, within the same session, before they apply for a loan. If you have any questions regarding this proposal, please contact me. Thank you for the opportunity to respond to your Request for Information. Sincerely, Laura Worley Relationship Manager The First Marblehead Corporation (716) 625‐6700 LWorley@fmd.com
Private Student Loan Proposal for the 2015‐2016 Academic Year
The First Marblehead Corporation
March 5, 2015
Request for Information
Union Federal® Private Student LoanThe Union Federal Private Student Loan program is a private education loan program available to both undergraduate and graduate students. It has been available to students and families nationwide since 2011. The First Marblehead Corporation* is a leader in the education finance industry. For more than 20 years, First Marblehead has provided student loan solutions to lenders, credit unions, and schools, while making the loan process as informative and straightforward as possible. In 2014, SunTrust Bank began to fund the Union Federal Private Student Loan program, formerly offered by Union Federal Savings Bank. The Union Federal Private Student Loan program continues to offer great features and benefits, while also bringing new enhancements. SunTrust Bank has been an education lender for nearly four generations and a provider of private loans since 1996. During this time, scores of colleges and universities in the U.S. have placed SunTrust Bank on their preferred lender lists. SunTrust Banks, Inc., is one of the nation’s largest commercial banking organizations, serving a broad range of consumer, commercial, corporate, and institutional clients. Headquartered in Atlanta, SunTrust operates an extensive branch and ATM network throughout the Southeast and Mid‐Atlantic states, along with a full array of technology‐based 24‐hour services. As a leader in education, mortgage, and household lending, SunTrust also serves clients across the country. American Education Services (AES), one of the nation’s leading student loan service providers, services loans made under the Union Federal Private Student Loan program. AES has been servicing private loans since 1999and now handles approximately $13.8billion in private student loan assets. Both SunTrust and The First Marblehead Corporation support responsible lending and are strong proponents of the smart borrowing principle, which encourages students to access scholarships, grants, and federally‐guaranteed loans before considering private student loans. *Per the Form 8‐K filed with the Securities and Exchange Commission on 11/10/2014, First Marblehead Education Resources will be transitioning certain aspects of the loan origination services that it currently provides on behalf of its lender clients to Firstmark Services, a subsidiary of Nelnet, Inc. First Marblehead will continue to manage the loan origination process while designing and developing private student loan programs for its lender partners. Firstmark Services will begin performing services for this loan program once FMER and SunTrust Bank have provided written approval of Firstmark Services’ loan processing platform and its related operational performance.
Customer Service for Borrowers The students we work with appreciate our knowledgeable and friendly customer service. Applicants are able to speak with a representative during business hours or may use the automated voice response system anytime. Customer Service (866) 513‐8445 Monday – Friday 8:00am‐9:00pm (ET) email@example.com Customer Service for Schools Schools consider us a trusted provider and partner. Our dedicated Priority Service team works exclusively with schools. Priority Service Associates will work closely with your Financial Aid Office to ensure that loans are processed smoothly and issues are resolved quickly. Priority Service (866) 296‐3637 Monday – Friday 8:00am‐9:00pm (ET) firstname.lastname@example.org Dedicated Relationship Manager We’ll strive to build a strong relationship with your school, partnering with you to enhance communication and streamline the processing of your school’s private student loans. Your dedicated Relationship Manager will educate your team of loan officers on operational details and keep them updated on product changes and enhancements. Laura Worley Relationship Manager (716) 625‐6700 LWorley@fmd.com Loan Servicer American Education Services (AES) is the Union Federal Private Student Loan servicer. Once a loan has been disbursed, loan information, account information, and repayment information are available online through AES’ website, aessuccess.org. American Education Services (AES) Borrower Info (800) 233‐0557 School Info (800) 443‐0646 www.aessuccess.org Monday – Friday 7:30AM ‐ 9PM (ET)
Program Eligibility• Undergraduate & Graduate students enrolled at least half‐time in a Title IV eligible program at an eligible institution.* • Available for past due balances for up to 90 days after the academic period end date. • Satisfactory academic progress not required.
Borrower Eligibility• The applicant on a student only application or the cosigner on a cosigned loan must have proof of positive income. • Student Only Application: The borrower must be a U.S. citizen or permanent resident. • International students must apply with an eligible U.S. cosigner.
Credit UnderwritingThe Union Federal Private Student Loan uses a unique, custom credit scoring model, which is not solely based on FICO, to credit decision and assign pricing to approved loan applications. The custom credit score considers the borrower’s and cosigner’s (if applicable) credit histories, repayment option and loan term selected, the requested loan amount, and information provided on the online application, when determining the pricing for each loan application.
Borrowing Amounts• The minimum loan amount is $1,001.1 • The annual loan amount is either your school’s certified loan amount or $65,000, whichever is less. • The maximum aggregate loan limit for all applicants is $150,000, inclusive of all education debt.
All Union Federal Private Student Loan borrowers are offered the following benefits:ACH Reduction: Borrowers can reduce their interest rate by up to 0.50% for auto debit when meeting general eligibility requirements.2 • Interest rate reduction of 0.25% for borrowers who elect to have monthly principal and interest payments transferred electronically from a bank account. • Additional 0.25% interest rate reduction for auto debit of monthly payments from a SunTrust deposit account. On‐Time Payments • 0.25% interest rate reduction when borrowers make 36 on‐time monthly principal and interest payments.3 Graduation Reward • Upon graduation with a bachelor’s degree or higher, all borrowers are eligible to request a 1% reduction to the principal balance, on a per loan basis, which is applied to the net disbursement amount. Proof of graduation must be submitted within 90 days after graduation and a certified copy of the diploma is acceptable. To receive the reward, no more than one late payment (any payment received more than ten days after the due date) is allowed prior to the graduation reward request. Cosigner Release • Cosigner release is available to borrowers who have made on‐time payments (within 10 days of due date) for the first 36 consecutive principal and interest payments. The applicant must pass applicable underwriting criteria and other requirements as set forth in the Credit Agreement at the time of the request. Loan Forgiveness • In the event of the primary borrower’s death or permanent disability, the loan will be forgiven. Proper documentation is required.4
Interest Rates, Repayment Options & Terms
Interest Rates: CompetitiveThe student may choose a fixed or variable interest rate upon passing the initial credit review during the online application session; interest rates offered will depend on credit history and the repayment plan and term selected. • Variable interest rates are based on the One‐Month London Interbank Offered Rate (LIBOR) index plus a margin; LIBOR may be adjusted monthly. • The One‐month LIBOR index is 0.250% as of March 1, 2015. • Variable interest rates currently range from 1‐month LIBOR + 2.99% to 1‐month LIBOR + 8.99% (APRs currently range from 3.241% to 8.672%).5 • Fixed rate pricing currently ranges from 4.75% to 11.25% (APRs currently range from 4.751% to 10.415%).6
Origination/Application Fees: ZeroThe Union Federal Private Student Loan program has no origination or application fees.
Repayment Options: Applicant’s ChoiceThe Union Federal Private Student Loan program makes it simple to find a loan that’s right for the student and cosigner, with flexible choices for repayment terms and options. • Repayment term options available are 7, 10, or 15 years. The 15 year repayment term is offered for loans greater than $5,000. Repayment option details: • Full Deferment: For borrowers who elect full deferment, principal and interest payments are fully deferred for up to 66 months from the date of the first disbursement, as long as the student remains enrolled at least half‐time. Principal and interest payments begin six months after graduating, or when the student is no longer enrolled half‐ time.
• Interest Only Repayment: With the interest only repayment option, principal payments will be deferred for up to 66 months from the date of the first disbursement of the loan. Interest payments begin 30‐60 days after the loan’s first disbursement. Principal and interest payments begin six months after a student graduates, or when the student ceases to be enrolled half‐time. Making interest payments gives students a head start on repaying their loans by reducing the amount of interest they would otherwise pay after graduation. • Immediate Repayment: Repayment of the principal and interest begins 30‐60 days after the final disbursement. The minimum monthly payment is $50.00.
Additional DefermentBorrowers may be eligible for up to an additional 48 months of deferment to pursue an additional degree. The additional deferment for re‐enrollment provides additional deferment to borrowers who have received a degree and exhausted their in‐school deferment eligibility, but have re‐ enrolled at least half‐time to pursue an additional degree.
Grace PeriodStudent borrowers who select the Full Deferment or Interest Only repayment options are eligible for a 6‐month grace period prior to the start of their full principal and interest payment schedule, provided that they graduate or fall below half‐time enrollment within 60 months of their first disbursement date. If, following 60 months, they continue to be enrolled half‐time; their grace period will be reduced by one month for each month that the student continues to be enrolled. Borrowers who select the Interest Only Repayment option must make their required interest payments during the grace period.
Interest Capitalization: Once at RepaymentInterest is capitalized once at repayment and at the end of any grace or deferment period. For borrowers who select the Immediate Repayment option, interest that accrues between the first disbursement and the final disbursement will be capitalized after the final disbursement.
Application HighlightsBorrowers can access the Union Federal Private Student Loan application by visiting www.unionfederalstudentloans.com and selecting “Apply Now”. The application will walk the borrower through the loan process, letting them know in advance what documentation they’ll need to prepare before they start, and confirming their selections throughout.
The unique Union Federal Private Student Loan online application gives students flexibility to customize their loan. Within the application, students can select repayment terms and options and see how their decisions effect their estimated monthly payment – the application instantly recalculates estimated payment options. The applicant can then customize loan options, see the impact of their choices on the loan pricing and compare scenarios before they make a commitment to final loan terms.
Online application features:• Easy to complete ‐ the online application often takes as little as 15 minutes. • Online initial credit review, typically within the same session. • Student may complete the application in one sitting with their cosigner or email the cosigner to allow them to enter their application information separately. • eSignature process is an option for both the Credit Agreement and Applicant Self‐ Certification form. • Applicants can provide supporting documentation required to complete the application process via our scan/upload feature where documents can be uploaded via the applicant’s secure, online account (this feature is in addition to fax and mail, which are also available options for document submission) • Phone support is available to help borrowers and cosigners with questions during the entire application process. • Disclosure statements are provided in accordance with regulations at the application, approval and final stages of the loan application process.
Early AwarenessWe believe it is important to provide smart borrowing information throughout the relationship with the student and their cosigner—at the beginning of the relationship, after deferment, and throughout the repayment process. The following plan was developed to help student borrowers understand exactly when their repayment begins, and how to effectively manage their private student loan debt so they can establish good credit and develop financial skills.
Starting 60 days prior to their first payment due date, SunTrust reaches out to borrowers by: • Mailing a welcome package to all borrowers • Reaching out to the borrower and the cosigner in a variety of ways to notify them of their pending repayment status. Communications include letters, emails and phone calls.
ForbearanceForbearance options are available if necessary.
Default ManagementAES, the Union Federal Private Student Loan servicer, has created an informational website, YouCanDealWithIt.com, that guides borrowers and parents through all aspects of the student aid process—prior to attending, during, and post‐college. It gives practical advice to parents, students (undergraduate and graduate), and college graduates about common financial situations they may be facing. The site does this by offering tips, calculators, resources, helpful budgeting guidelines, information about student loans, and more. YouCanDealWithIt.com also has valuable resources that financial aid offices can take advantage of: • Financial Wellness Curriculum: this is a series of PowerPoint presentations on topics that are important to today’s college students, such as financial wellness, understanding financial aid and how to establish good credit. These presentations are the perfect complement to your current orientation program or exit counseling and can help teach students the basics about money management and arm them with tips and information to help them make smart, educated financial decisions. • Creating a Default Prevention Plan: this information will assist schools in creating a default prevention plan. It will also help advise students about educational loans and debt management to allow for a seamless transition from the classroom to the working world. This includes a three‐step letter series, a default aversion roster, knowing your cohort default rate and also provides sample call scripts and scenarios to explore the best possible options available for dealing with delinquent student loan borrowers. • Calculators and Downloadable Forms: monthly student loan payments can be estimated using the calculator appropriate to the type of repayment plan. There are also downloadable deferment and forbearance forms to keep on hand for student borrowers who are interested in, and qualify for, deferment and forbearance options.
School Processing and Certification Information
CertificationFor Union Federal Private Student Loans, a certification request will be sent once the loan application process is complete and all of the students (and cosigner’s) supporting documents have been received. We support various industry certification delivery methods such as ELM, ScholarNet, eCourier, FirstDegree and Fax. We are able to accommodate SUNY Fredonia’s preferred method of certification via ELM. We also provide a web‐based system, FirstDegree, to let Financial Aid Administrators certify Union Federal Private Student Loans and check the status of a borrower’s loan anytime. Schools can access this certification tool at https://www.firstmarkservices.com/schools.aspx.
Loan Amount ChangesYou can change a loan amount by contacting Priority Service via phone at (866) 296‐3637 or email at email@example.com. You may also submit loan changes via your preferred CommonLine processing method.
DisbursementFunds for Union Federal Private Student Loans are always sent directly to the school. Your office can request disbursement on a daily basis or on specific days of the week. You may schedule up to four disbursements within the academic period covered by the loan. Disbursements can be made via SUNY Fredonia’s preferred method of ELM NDN.
CancellationsFor borrowers who choose to make payments while they are in school, subsequent disbursements may be canceled if their payments become delinquent. Our process is to notify the school before this occurs. The school, student or cosigner can cancel a specific loan disbursement or the entire loan, at any time prior to the disbursement date.
RefundsFor full refunds, your school has 60 days from the original disbursement date to completely cancel the loan. If the full refund arrives after day 61, the student is responsible for the accrued interest.
ReportingFirst Degree provides Financial Aid Administrators with online access to loan information and offers robust reporting capabilities for all loan applications in progress, regardless of the status.
Financial LiteracyEveryone benefits when borrowers make smart financial decisions. SunTrust and First Marblehead are dedicated to providing options for students who have exhausted their government and institutional financial aid. The goal is the same as yours: to provide the appropriate level of funding to students to fill the cost gap between the aid they receive and the full cost of their education. At First Marblehead’s website,www.smartborrowing.org, students and their families can find an unbiased resource for financial aid and student loan information. The focus on financial literacy starts at SmartBorrowing.org: • Parents and students can learn how to cost‐effectively finance college • This site is a trusted source for objective, consumer‐friendly information with interactive tools , calculators, a calendar, checklists and worksheets • The site is organized in five step‐by‐step sections: 1. Start Early 2. Estimate Your Needs 3. Federal Aid First 4. Filling the Gap 5. Borrowing Smart
Address for returns of fundsUnion Federal Private Student Loan PO Box 82522 Lincoln, NE 68501‐2522
Loan Processing CodesLender: 907798 Guarantor: Q15 NCHELP: P16
SunTrust reserves the right to change or discontinue these programs without notice. The information included in this response is intended solely for the entity to which it is addressed and contains confidential and/or proprietary material of SunTrust Bank and/or The First Marblehead Corporation. Any retransmission, dissemination or other disclosure of this information is prohibited except as required by applicable law.
Footnotes* Loans are not available to students who are permanent residents of Wisconsin or Iowa. 1 The following are those states with specific exceptions: Alaska ($5,001), Colorado ($3,001), New Mexico ($2,501), Oklahoma ($4,901), Rhode Island ($5,001), and South Carolina ($3,601). 2 Interest rate reductions offered for automatic payment from a bank account: 0.25% interest rate reduction for ACH payment from any bank account and an extra 0.25% interest rate reduction when ACH payments are made from a SunTrust account. ACH interest rate reduction(s) apply when full payments (including both principal and interest) are automatically drafted from a bank account. Interest rate reduction(s) will remain on the account unless (1) the automatic deduction of payments is stopped (including times during deferment or forbearance) or (2) there are three automatic deductions returned for insufficient funds within the life of the loan. The additional SunTrust ACH reward is available for loans first disbursed on or after 6/1/11 and will be applied after the first automatic payment is successfully deducted from a SunTrust Bank checking, savings or money market account. 3 Borrowers can earn a 0.25% interest rate reduction by consistently making on‐time payments. Once borrowers have made on‐ time monthly principal and interest payments (received within 10 days of the due date) for a minimum of the first 36 consecutive months, they can request the 0.25% interest rate reduction. To qualify, the borrower must also have elected to use automated electronic payments prior to the 36th payment. The benefit will continue even if they choose to discontinue automated electronic payments after the 36th on‐time payment. 4 If the primary borrower on a loan dies after disbursement of all or part of a loan that has not previously defaulted due to non‐ payment or bankruptcy, then the loan will be discharged if the servicer is informed of and receives acceptable proof of death. In the event that the primary borrower becomes totally and permanently disabled, the borrower, or a representative on the borrower’s behalf, must obtain a discharge application from the servicer, and must return it with either (a) a physician’s certification that the borrower has a medically determinable physical or mental impairment preventing the borrower from engaging in substantial gainful activity in any field of work, that either (i) can be expected to result in death or (ii) has lasted, or can be expected to last, for a continuous period of sixty (60) months, or (b) in the event of a disabled veteran, documentation from the U.S. Department of Veterans Affairs (VA) demonstrating that the borrower is unemployable due to a service‐ connected disability, as applicable. The servicer must receive a completed application within ninety (90) days of the date of the physician’s certification; or, in the event the borrower is returning VA documentation, 90 days from the date of the borrower’s certification. 5 This loan has a variable rate that is based on the One‐month London Interbank Offered Rate (LIBOR) index which is published in the “Money Rates” section of The Wall Street Journal (Eastern Edition) and will be equal to the One‐month LIBOR rate published on the 25th day (or if such 25th day is not a business day, the next business day thereafter) of the month immediately preceding such calendar month, rounded up to the nearest one‐eighth of one percent (0.125%). The interest rate will be calculated each month by adding the margin (which can range from 2.99% to 8.99%, depending upon the borrower’s and cosigner’s (if applicable) credit histories, repayment option and loan term selected, and the requested loan amount and information provided on the online loan application. If approved, we will notify the borrower of the rate they qualify for within the stated range, to the current One‐month LIBOR index (which is 0.250% as of 3/1/2015). The interest rate may increase or decrease monthly if the One‐month LIBOR index changes which will affect the monthly payment. Rates are typically higher without a cosigner. The APR ranges from 3.241% (lowest) to 8.672% (highest). The lowest APR example assumes a $10,000 loan disbursed over two transactions and an immediate repayment option, is based on a 7‐year repayment term (84 months), a monthly principal and interest payment of $133.76 and a 2.99% margin. The highest APR example assumes a $10,000 loan disbursed over two transactions and a deferred repayment option, and is based on a 15‐year repayment term (180 months), a 45‐month deferment period, a six month grace period, a monthly principal and interest payment of $142.10, and an 8.99% margin. 6 For the fixed rate option, the APR ranges from 4.751% (lowest) to 10.415% (highest). The lowest APR example assumes a $10,000 loan disbursed over two transactions and an immediate repayment option, and is based on a 7‐year repayment term (84 months), a monthly principal and interest payment of $141.01 and a 4.75% interest rate (in effect as of 3/1/2015). The highest APR example assumes a $10,000 loan disbursed over two transactions and a deferred repayment option, and is based on a 15‐year repayment term (180 months), a 45‐month deferment period, a six month grace period, a monthly principal and interest payment of $168.76, and a 11.25% interest rate (in effect as of 3/1/2015). Interest rates are based on the borrower’s and cosigner’s (if applicable) credit histories, the repayment option and loan term selected, and the requested loan amount and
information provided on the online loan application. If approved, we will notify the borrower of the rate they qualify for within the stated range.