NFP_Addiitonal_Allocation_Announcement_-_Final_9-23-13.docx

Allocations of Additional Borrower Accounts to Not-For-Profit Servicers

Pursuant to the Higher Education Act of 1965, as amended, certain Not-for-Profit (NFP) servicers received an initial allocation of 100,000 borrower accounts when these servicers began servicing loans for the Department. The Department will make the first allocation of additional borrower accounts among these NFP servicers based on their scores for the four quarters ending on June 30, 2014, on the five performance metrics established in the NFP contracts. Specific allocation results will be announced after August 15, 2014.

Performance metric scores will be generated for all NFPs currently under contract. The Department will review performance data and operational needs after June 30, 2014, and determine which NFPs meet the minimum performance requirements necessary to continue servicing federal student loans. Accounts held by those NFP servicers with scores below the minimum will be allocated to those NFP servicers with performance scores at or above the minimum. The Department will also reassess the current threshold requiring that an NFP manage a minimum of 2 million accounts before receiving allocations of new borrower accounts. The allocation of borrower accounts will be based on performance and will reflect the number of eligible and qualified NFPs participating under each contract.

For example, if in August 2014 10 NFP servicers are actively servicing 1,000,000 borrower accounts (100,000 each) and seven of the servicers meet or exceed the minimum performance requirements but three servicers do not, the 300,000 borrower accounts managed by the servicers with scores below the minimum performance requirements will be allocated to the remaining seven servicers. The three servicers who did not meet the minimum performance requirements will not receive additional accounts for the duration of their contracts. Accounts will be transferred on a schedule to be determined by the Department.

As of the close of the NFP solicitation period on December 1, 2013, the Department will no longer accept additions to current teaming arrangements. Accounts at NFP servicers wishing to cease operations after that date will be allocated at the discretion of the Department.