Sole Source Justification Form - Nelnet FY27 - SPO Signed.pdf

Sole Source Justification Form

Version 7.01 Page 1 of 5

Bulletin Reference Number 27-691ISAC-IDAPP-B-53732

Requesting Agency/University Illinois Student Assistance Commission

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

Department/Bureau/Section: ILLINOIS DESIGNATED ACCOUNT PURCHASE PROGRAM (IDAPP)

Need Identified Date: 5/15/2026 Supply/Service Need By Date: 9/15/2026

Project Title: IDAPP Student Loan Servicing

Vendor: Nelnet Servicing, LLC

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 re-establish a sole source contract with Nelnet Servicing, LLC to service its student loans.

Services include billing and payment processing, account maintenance, deferment/entitlement processing, adjustments to borrowers' accounts, borrower notifications, and financial reporting.

Value: Estimated Value of Initial Term, this Change Order or Amendment: 170,000

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: 9/15/2026

Estimated Contract End Date: 9/14/2027

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.

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- transitioning the student loan portfolio to a new servicer would result in significant one time deconversion and conversion costs t

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

Version 7.01 Page 2 of 5

Bulletin Reference Number 27-691ISAC-IDAPP-B-53732

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 9/15/2016 9/14/2021 6,250,000 Student Loan FFELP Services (IPB# 22035459) (vendor: EdFinancial Services LLC)

GS-2015-173 RFP

2 9/15/2021 9/14/2026 5,000,000 Renewal of Student Loan FFELP Services GS-2015-173 Renewal

Assignment of FFELP Loan portfolio previously serviced by EdFinancial to Nelnet, was executed in April 2023

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 (Nelnet), for the following services: billing, payment posting, account maintenance, deferment/entitlement processing, adjustments to borrowers' accounts, borrower notifications and loan reporting for FFELP (Federal Family Education Loan Program) loans.

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 loan servicing is to be in full compliance with regulations and guidelines established by the U.S. Department of Education (DOE), the Federal Trade Commission, Internal Revenue Service and all other applicable federal, state, and institutional regulatory organizations, and guidelines, and to protect the integrity of the loan data.

In 2010, ISAC reduced its IDAPP staff when the U.S. Department of Education (under the Federal Family Education Loan Program, FFELP), discontinued the origination of student loans. As a result, IDAPP outsourced the servicing of all of its loans it has an obligation to service. The loans that will be serviced by Nelnet are all FFELP loans. Due to the fact that IDAPP does not have the infrastructure and personnel to enable ISAC perform servicing of these FFELP loans internally, therefore, ISAC requires an external loan servicer to perform these services.

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 to provide FFELP loan servicing, including providing customer service, billing services, processing services, account management and financial reporting. The services must be in full compliance with regulations and guidelines established by the U.S. department of education, the Federal Trade Commission, Internal Revenue Service and all other applicable federal, state, and institutional regulations and guidelines and to protect the integrity of the data.

Version 7.01 Page 3 of 5

Bulletin Reference Number 27-691ISAC-IDAPP-B-53732

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?

The requested services are for the continued servicing and reporting of IDAPP’s FFELP loan portfolio in compliance with all applicable federal and state requirements. The requested services include borrower account management, payment processing, deferment and forbearance processing, borrower notifications, financial reporting, and borrower access to account information through a unified servicing platform. Due to the complexity of FFELP loan servicing and the need to maintain uninterrupted servicing operations, the agency requires a servicing solution with existing infrastructure, established borrower account data, operational continuity, and the ability to support the current portfolio without disruption.

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 Servicing LLC (parent company of Firstmark Services) currently services ISAC’s IDAPP private loan portfolio and possesses the existing infrastructure, borrower data, operational knowledge, and servicing continuity necessary to efficiently manage the FFELP loans as well. Utilizing the current servicer minimizes operational disruption and reduces risks associated with transferring sensitive borrower information to another entity.

In addition, transitioning the portfolio to a new servicer would result in significant one-time deconversion and conversion costs that are not economically feasible for the State. Based on the current portfolio of approximately 7,090 loans, estimated deconversion costs are $21.20 per loan, totaling approximately $150,308. Additional estimated conversion costs of $5 per borrower for 2,871 borrowers total approximately $14,355, resulting in total estimated transition costs of approximately $164,663, which would nearly equal the total value of the contract.

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?

Alternative servicing options were not evaluated due to the significant operational disruption, borrower data transfer risks, and substantial one time transition costs associated with transferring the existing portfolio to another servicer.

6. Are there resellers or distributors?

Yes No N/A

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 Nelnet and has FFELP loan portfolios being serviced by Nelnet. The pricing is based on volume and is comparable to other student loan servicing contracts.

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?

Failure to proceed with this procurement would significantly disrupt services currently being delivered to borrowers and could cause the Agency to miss critical, required servicing reporting.

Without approval, the Agency faces the risk of not issuing required notices in a timely or compliant manner, or issuing them in a way that is not cost-effective or operationally sound. Additionally, transitioning to a different servicer would result in estimated transition costs, including deconversion fees to the current servicer and conversion fees to a new servicer. The estimated total for deconversion and conversion fees is $164,663.

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

Version 7.01 Page 4 of 5

Bulletin Reference Number 27-691ISAC-IDAPP-B-53732

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 8/14/2026

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 Eric.Zarnikow@illinois.gov

Phone Number Date

Printed Name Eric Zarnikow

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 217-299-0935 Date

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

Version 7.01 Page 5 of 5

Bulletin Reference Number 27-691ISAC-IDAPP-B-53732

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 loan servicing is to be in full compliance with regulations and guidelines established by the U.S. Department of Education (DOE), the Federal Trade Commission, Internal Revenue Service and all other applicable federal, state, and institutional regulatory organizations, and guidelines, and to protect the integrity of the loan data.

In 2010, ISAC reduced its IDAPP staff when the U.S. Department of Education (under the Federal Family Education Loan Program, FFELP), discontinued the origination of student loans. As a result, IDAPP outsourced the servicing of all of its loans it has an obligation to service. The loans that will be serviced by Nelnet are all FFELP loans. Due to the fact that IDAPP does not have the infrastructure and personnel to enable ISAC perform servicing of these FFELP loans internally, therefore, ISAC requires an external loan servicer to perform these services.

In addition, transitioning the portfolio to a new servicer would result in significant one-time deconversion and conversion costs that are not economically feasible for the State. Based on the current portfolio of approximately 7,090 loans, estimated deconversion costs are $21.20 per loan, totaling approximately $150,308. Additional estimated conversion costs of $5 per borrower for 2,871 borrowers total approximately $14,355, resulting in total estimated transition costs of approximately $164,663, which would nearly equal the total value of the contract.

Without approval, the Agency faces the risk of not issuing required notices in a timely or compliant manner, or issuing them in a way that is not cost‑effective or operationally sound. Additionally, transitioning to a different servicer would result in estimated transition costs, including deconversion fees to the current servicer and conversion fees to a new servicer. The estimated total for deconversion and conversion fees is $164,663.