Part I Sole Source Justification Form - IDAPP Student Loan Servicing - SPO signed.pdf

Sole Source Justification Form

Version 7.01 Page 1 of 6

Bulletin Reference Number 26-691ISAC-IDAPP-B-50645

Requesting Agency/University Illinois Student Assistance Commission

Sole Source Justification Form - Part I Section I - General Information

Department/Bureau/Section: IDAPP (Illinois Designated Account Purchase Program)

Need Identified Date: Oct 30, 2025 Supply/Service Need By Date: Feb 15, 2026

Project Title: IDAPP Student Loan Servicing

Vendor: Nelnet Servicing, LLC d/b/a Firstmark Services

Provide a description of the supplies or services required:

The Illinois Designated Account Purchase Program (IDAPP), a division of the Illinois Student Assistance Commission (ISAC), seeks to reestablish a sole source contract with Nelnet Servicing, LLC to service its student loans. This includes providing the following services: billing payment posting, account maintenance, deferment/entitlement processing, adjustments to borrower's accounts and other notifications and loan reporting.

Value: Estimated Value of Initial Term, this Change Order or Amendment: 230,000

Will this Sole Source amend a Professional or Artistic Services contract? Yes No

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Type: New Sole Economically Feasible Source

Section II - Proposed Term

One-Time Purchase Term Contract

Estimated Contract Begin Date: Feb 16, 2026

Estimated Contract End Date: Feb 15, 2027

Number of Potential Renewals: 0

Length of Each Renewal in Months:

Total Value of All Renewals:

If a Term Contract, does the term, including renewals, exceed 12 months? Yes No

Section III - Funding Source Select the type of funding to be used (Check all that apply): State Appropriate Funds Federal Funds Other (Explain):

The funding to be used is IDAPP Non Appropriated Funds. No state or federal funds are used.

Section IV - Sole Source Justification

This purchase is economically only available from a single source primarily because it is: (If "Other" explain in one sentence)

Other - transferring to another vendor would create high conversion costs, data-security risks, and borrower-service disruptions

Are there secondary justification(s) for this sole source? Yes No

Version 7.01 Page 2 of 6

Bulletin Reference Number 26-691ISAC-IDAPP-B-50645

Requesting Agency/University Illinois Student Assistance Commission

Section V - Purchase History

Has the Agency or University Purchased these supplies or services in the past? Yes No

Term Term From Term To Value Description Contract Number Type

1 02/01/2013 01/31/2016 1,500,000 Student Loan Servicing FA2010-2 Sole Source

2 02/05/2015 02/04/2019 900,000 Student Loan Servicing GS-2016-09 Sole Source

3 02/05/2019 02/04/2020 300,000 Student Loan Servicing GS-2019-202 Sole Source

4 02/05/2020 02/04/2021 300,000 Student Loan Servicing GS-2020-131 Sole Source

5 02/05/2021 02/04/2022 240,000 Student Loan Servicing GS-2021-136 Sole Source

6 02/05/2022 02/04/2023 220,000 Student Loan Servicing GS-2022-157 Sole Source

7 02/05/2023 02/04/2024 205,000 Student Loan Servicing GS-2023-158 Sole Source

8 02/29/2024 02/15/2025 218,000 Student Loan Servicing GS-2024-177 Sole Source

9 02/16/2025 02/15/2026 210,000 Student Loan Servicing GS-2025-182 Sole Source

If more than 10, or if other comments, explain:

Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

The Illinois Designated Account Purchase Program (IDAPP), a division of the Illinois Student Assistance Commission (ISAC), seeks to enter into a sole economically feasible source contract with Nelnet Servicing, LLC formerly Firstmark Services, LLC (Firstmark) for the following services: billing, payment posting, account maintenance, deferment/entitlement processing, adjustments to borrower's accounts and other notifications and loan reporting.

ISAC's mission is to make college accessible and affordable for Illinois Students. The first step to achieve this goal was when IDAPP, a division of ISAC, made loans to students/borrowers. Servicing loans is the next step in the process. The loans must be serviced properly to ensure that borrowers get the information they need to pay their loans in a timely manner.

In 2010, ISAC reduced its IDAPP staff when the Federal Family Education Loan program discontinued the origination of student loans.

As a result, IDAPP outsourced the servicing of all of its loans it continues to have an obligations to service. The loans that will be serviced by Nelnet are the private loans IDAPP originated when it had the infrastructure to service loans internally. Due to the fact that IDAPP does not have the staff to perform servicing of these private loans internally, it would require external loan service organizations to service these private loans.

2. Provide a list and describe in detail the specifications required to satisfy the need:

A sole economically feasible source contract with Nelnet Servicing, LLC formerly Firstmark Services, LLC (Firstmark) for the following services: billing, payment posting, account maintenance, deferment/entitlement processing, adjustments to borrower's accounts and other notifications and loan reporting. See attachment, "SSJF Supplemental Doc'

Version 7.01 Page 3 of 6

Bulletin Reference Number 26-691ISAC-IDAPP-B-50645

Requesting Agency/University Illinois Student Assistance Commission

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

ISAC, as the Master-Servicer of these private loans is required to ensure the loans are properly serviced and managed, while ensuring details of the loan holders are securely kept.

In 2012, after lengthy conversations between ISAC, CPO-GS and PPB; it was agreed that ISAC should enter into a sole economically feasible source with Firstmark servicer, LLC (IPB 22029661). It is pertinent to note that Firstmark is a subsidiary of Nelnet Inc., which has since assigned the contract to Nelnet Servicing LLC d/b/a Firstmark Services. The current contract with Nelnet Servicing LLC will expire on 2/15/2026.

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

Nelnet Inc., (the parent company of Firstmark Services), currently performs services relating to loans relating to IDAPP's Federal Family Eduction Loan Program (FFELP). As such, it appears reasonable to have Firstmark Services, (as Nelnet's subsidiary ) manage the private loans as well, considering efficiencies that would be achieved.

Given the nature of the student loan industry and servicing of loan portfolios, it will also help minimize the risks associated with the transfer of borrowers' personal information to another entity at this time.

5. Has the Agency or University considered alternative supplies or services to satisfy their need? Yes No

5a. If no, why weren't alternatives evaluated?

Firstmark Services is a foremost and well-known loan servicing entity in the student loan servicing industry. See also the additional notes above regarding efficiencies achieved because Firstmark Services’ parent company, Nelnet, Inc., already services IDAPP’s FFELP loan portfolio.

Transitioning to a new loan servicer would impose significant and unnecessary economic burdens on the State. Based on Nelnet’s pricing schedule, both the outgoing servicer/vendor (Nelnet) and any incoming servicer/vendor would charge ISAC fees associated with transferring servicing responsibilities. Nelnet would charge deconversion fees of $17.82 per borrower and an additional $3.41 per loan for the loan transfer. A new servicer would then impose conversion fees of approximately $3.41 per borrower for manual conversion or $1.14 per borrower for automated conversion. When these components are combined, the estimated cost to switch servicers/vendors is approximately $25 per account. For IDAPP’s portfolio of 6,323 accounts, this results in an estimated one-time expense of approximately $158,075, with no corresponding functional advantage to the State. These costs are entirely avoidable by continuing the contract with Nelnet, making the incumbent the more economically feasible option.

In addition, changing loan servicers introduces a period during which loans are not actively serviced. Industry research confirms that the deconversion and conversion process can create temporary interruptions during which required notices, payment postings, and borrower communications may be delayed. Given IDAPP’s statutory obligations and borrower-service commitments, any interruption in servicing presents compliance and financial risks.

Alternative vendors were not pursued further because the deconversion and conversion processes require transferring all 6,323 borrower files containing sensitive personally identifiable information, including Social Security Numbers, home and email addresses, and phone numbers. Each additional transfer increases the risk of data exposure. Further, the estimated one-time conversion cost of approximately $158,075 would provide no additional value to the State and makes it economically unjustifiable to select any vendor other than the incumbent.

6. Are there resellers or distributors?

Yes No N/A

Version 7.01 Page 4 of 6

Bulletin Reference Number 26-691ISAC-IDAPP-B-50645

Requesting Agency/University Illinois Student Assistance Commission

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

ISAC negotiated with Firstmark and has multiple portfolios being serviced by Firstmark. All student loan portfolios are covered under this servicing agreement and no separate agreements are required. The pricing is based on volume and is comparable to other student loan servicing contracts. See attached pricing list, "Pricing - IDAPP Schedule 2025".

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

Yes No

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

Services presently being provided to borrowers would be seriously disrupted and servicing opportunities missed if this procurement activity does not go forward. If the procurement is not approved, the Agency run the risk of not sending out required notices or sending them out in a manner that is not the most economical and feasible. This could result in borrowers not making timely payments.

In addition to major service disruptions, the State would incur substantial one-time conversion expenses, estimated at close to $160,000, if required to competitively rebid and transition to a new vendor. This includes Nelnet’s de-conversion charges and the incoming servicer’s conversion fees. These costs would divert funds from borrower-service activities and are entirely avoidable. The transfer process also increases the risk of exposure of borrower PII due to the required movement of thousands of sensitive loan records.

10. Is there any additional information you would like to add to justify this sole source?

Version 7.01 Page 5 of 6

Bulletin Reference Number 26-691ISAC-IDAPP-B-50645

Requesting Agency/University Illinois Student Assistance Commission

Section VII

Requesting Department Representative

Requesting Department Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

Date 11/3/2025

Printed Name Rolake Adedara E-mail Address Rolake.Adedara@illinois.gov

Phone Number 847-831-8574

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed)

E-mail Address

Phone Number Date

Printed Name

Agency Bureau/Division Head or University Purchasing Director and Not a Designee

SPO Approval and Signature Required

I have reviewed and understand the contents of this Sole Source Justification and agree with the State Agency or University determination.

I have reviewed and understand the contents of this Sole Source Justification and do not agree with the State Agency or University determination. As a result, the State Agency or University must explore other sourcing methods to satisfy their need.

State Purchasing Officer Signature Phone Number 17-299-0935 Date

Printed Name Colene Underwood E-mail Address Colene.Underwood@Illinois.gov

Version 7.01 Page 6 of 6

Bulletin Reference Number 26-691ISAC-IDAPP-B-50645

Requesting Agency/University Illinois Student Assistance Commission

Sole Source Justification Form - Part II Section I - General Information

Project Title

Vendor

Initial Date of Procurement Bulletin Posting

Was a Sole Source hearing held per 30 ILCS 500/20-25?

Yes - Complete Section II and III below (Section II will only be visible when this option is selected)

No - Section II not required, go to Section III below Section III - CPO Approval and Signature Required

Based on my review, I authorize the Agency/University to proceed in accordance with the published Notice referenced above.

Based upon my review, I authorize the Agency/University to proceed with the following Changes.

Based on my review, the Agency/University is not authorized to proceed with this sole source as presented and my recommendation is that it be cancelled.

Other

CPO Signature CPO Phone

Printed Name Date

CPO E-mail

Version 7.01 Page of Sole Source Justification Form - Part I Section I - General Information Will this Sole Source amend a Professional or Artistic Services contract?

If yes, what was the original contract value?

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Section II - Proposed Term If a Term Contract, does the term, including renewals, exceed 12 months?

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

Section III - Funding Source Select the type of funding to be used (Check all that apply):

Section IV - Sole Source Justification Are there secondary justification(s) for this sole source?

Section V - Purchase History Has the Agency or University Purchased these supplies or services in the past?

Term Term From Term To Value Description Contract Number Type Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

2. Provide a list and describe in detail the specifications required to satisfy the need:

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

5. Has the Agency or University considered alternative supplies or services to satisfy their need?

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

5a. If no, why weren't alternatives evaluated?

6. Are there resellers or distributors?

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

8a. If yes, please provide details regarding future obligations and/or needs:

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

10. Is there any additional information you would like to add to justify this sole source?

Section VII Requesting Department Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed) SPO Approval and Signature Required Sole Source Justification Form - Part II Section I - General Information Was a Sole Source hearing held per 30 ILCS 500/20-25?

Section II - Sole Source Hearing Details The State posted to the Illinois Procurement Bulletin a description of the State's need, the justification for the sole source decision, and information regarding the opportunity to submit comments and testify at a public hearing. Notice of the hearing was also posted outside of the hearing room 48 hours prior to the hearing.

The public hearing was conducted for the purpose of receiving testimony regarding the sole source determination. The Hearing Officer recommends the following:

The following relevant documents are attached:

Section III - CPO Approval and Signature Required 9.0.0.2.20101008.1.734229

ISAC's mission is to make college accessible and affordable for Illinois Students. The first step to achieve this goal was when IDAPP, a division of ISAC, made loans to students/borrowers. Servicing loans is the next step in the process. The loans must be serviced properly to ensure that borrowers get the information they need to pay their loans in a timely manner.

In 2010, ISAC reduced its IDAPP staff when the Federal Family Education Loan program discontinued the origination of student loans. As a result, IDAPP outsourced the servicing of all of its loans it continues to have an obligations to service. The loans that will be serviced by Nelnet are the private loans IDAPP originated when it had the infrastructure to service loans internally. Due to the fact that IDAPP does not have the staff to perform servicing of these private loans internally, it would require external loan service organizations to service these private loans.

In 2012, after lengthy conversations between ISAC, CPO-GS and PPB; it was agreed that ISAC should enter into a sole economically feasible source with Firstmark servicer, LLC (IPB 22029661). It is pertinent to note that Firstmark is a subsidiary of Nelnet Inc., which has since assigned the contract to Nelnet Servicing LLC d/b/a Firstmark Services. The current contract with Nelnet Servicing LLC will expire on 2/15/2026.

Q4Answer: Nelnet Inc., (the parent company of Firstmark Services), currently performs services relating to loans relating to IDAPP's Federal Family Eduction Loan Program (FFELP). As such, it appears reasonable to have Firstmark Services, (as Nelnet's subsidiary ) manage the private loans as well, considering efficiencies that would be achieved.

Given the nature of the student loan industry and servicing of loan portfolios, it will also help minimize the risks associated with the transfer of borrowers' personal information to another entity at this time.

Transitioning to a new loan servicer would impose significant and unnecessary economic burdens on the State. Based on Nelnet’s pricing schedule, both the outgoing servicer/vendor (Nelnet) and any incoming servicer/vendor would charge ISAC fees associated with transferring servicing responsibilities. Nelnet would charge deconversion fees of $17.82 per borrower and an additional $3.41 per loan for the loan transfer. A new servicer would then impose conversion fees of approximately $3.41 per borrower for manual conversion or $1.14 per borrower for automated conversion. When these components are combined, the estimated cost to switch servicers/vendors is approximately $25 per account. For IDAPP’s portfolio of 6,323 accounts, this results in an estimated one-time expense of approximately $158,075, with no corresponding functional advantage to the State. These costs are entirely avoidable by continuing the contract with Nelnet, making the incumbent the more economically feasible option.

In addition, changing loan servicers introduces a period during which loans are not actively serviced. Industry research confirms that the deconversion and conversion process can create temporary interruptions during which required notices, payment postings, and borrower communications may be delayed. Given IDAPP’s statutory obligations and borrower-service commitments, any interruption in servicing presents compliance and financial risks.

Alternative vendors were not pursued further because the deconversion and conversion processes require transferring all 6,323 borrower files containing sensitive personally identifiable information, including Social Security Numbers, home and email addresses, and phone numbers. Each additional transfer increases the risk of data exposure. Further, the estimated one-time conversion cost of approximately $158,075 would provide no additional value to the State and makes it economically unjustifiable to select any vendor other than the incumbent.

In addition to major service disruptions, the State would incur substantial one-time conversion expenses, estimated at close to $160,000, if required to competitively rebid and transition to a new vendor. This includes Nelnet’s de-conversion charges and the incoming servicer’s conversion fees. These costs would divert funds from borrower-service activities and are entirely avoidable. The transfer process also increases the risk of exposure of borrower PII due to the required movement of thousands of sensitive loan records.