The Custom Choice Loan from SunTrust. Private Student Loan Proposal

Transcription

1 The Custom Choice Loan from SunTrust Private Student Loan Proposal Academic year The State University of New York at Fredonia March 14, 2017

2 March 14, 2017 Mark Zaffalon Office of Financial Aid The State University of New York at Fredonia 209 Maytum Hall Fredonia, NY Dear Mark, Thank you for providing SunTrust Bank with the opportunity to respond to The State University of New York at Fredonia s Request for Information for private student loan lenders. SunTrust, in partnership with The First Marblehead Corporation, has designed an innovative private student loan program that offers your families the ability to customize their loan options. Our sophisticated loan platform enables families to select between a fixed and a variable interest rate in the same application session. In addition, by selecting from multiple repayment term and options, families can determine the pricing and program that best meets their individual financing needs. SunTrust Custom Choice Loan is truly a leader in the private student loan marketplace. Thank you for your consideration. Please contact me if you have any questions regarding this proposal. Sincerely, Adedayo Lawal Relationship Manager First Marblehead Corporation (404) ALawal@fmd.com

3 SunTrust Bank SunTrust is an organization driven by purpose and a personal touch and is passionate about Lighting the Way to Financial Well-Being by helping clients, teammates and communities achieve financial confidence. As one of the nation's largest and strongest financial services companies, SunTrust offers a full suite of products and services designed to meet the needs of our consumer, business, corporate and institutional clients. SunTrust knows that financial stress is prevalent in America, across all income levels. So, we sparked the onup Movement to inspire everyone to move from financial stress to confidence by taking the first step. Learn more at onup.com. For more details on SunTrust Bank, visit suntrust.com. *Data in the above chart is as of June 30, Source: 1

4 Lender, Originator & Servicer SunTrust Bank has been an education lender for nearly four generations and a provider of private student loans since During this time, colleges and universities across the U.S. have placed SunTrust Bank on their preferred lender lists. SunTrust Bank has partnered with The First Marblehead Corporation and its affiliates (collectively, First Marblehead) to originate the Custom Choice Loan. The Custom Choice Loan origination process fully complies with federal requirements under the Higher Education Opportunity Act (HEOA) and Truth in Lending Act (TILA). In addition to program management, First Marblehead has school Relationship Managers located strategically throughout the United States and stands ready to assist you with all your school s loan processing and product information needs. American Education Services (AES), one of the nation s leading private student loan service providers, provides loan servicing for the Custom Choice Loan. AES has been servicing private loans since 1972 and now handles approximately $13.8 billion in private student loan assets. SunTrust has never sold any Custom Choice Loans to investors. However, SunTrust reserves the right to do so in the future. Both SunTrust and First Marblehead support responsible lending and are strong proponents of smart borrowing. Before applying for a private student loan, SunTrust recommends comparing all aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit suntrusteducation.com/compare. Loan Overview & Program Information The Custom Choice Loan program provides undergraduate and graduate students competitive pricing, a choice of a fixed or variable rate, and borrower benefits that encourage degree completion and thoughtful, informed borrowing decisions. The application process provides added transparency by displaying, in the same session, an estimated repayment calculation for the actual pricing offered. The online application also allows applicants to customize their loan options and see the impact of their choices on pricing before they make any commitment. The loan requires school certification and can only be used to pay for educational expenses as defined by the school. 2

5 Custom Choice Loan Overview Product Name Lender Name Custom Choice Loan SunTrust Bank Lender Code Guarantor Code NCHELP Servicer Code School Contact Information Q14 Q12 (866) Monday Friday 9:00am-6:00pm ET Borrower Contact Information (866) Monday Friday 9:00am-8:00pm ET Application Link Program Manager suntrusteducation.com/customchoice The First Marblehead Corporation (FMD) Loan Servicer American Education Services (AES) Borrower Information (800) School Information (800) aessuccess.org School Certification ELM, ScholarNet, ecourier, SchoolCertify.com or Fax 3

6 Borrower Application & Disclosure Process Application Highlights The online application process for the Custom Choice Loan provides applicants transparency by displaying, in the same session, an estimated repayment calculation based on the pricing an applicant is offered. The applicant can then customize loan options and see the impact of their choices on the loan pricing before they make a commitment to final loan terms. The following processing features are available for applicants: Online, same session, initial credit review Online application including loan customization and real-time pricing calculations EasyInvite SM tool gives applicants a way to share the application with their cosigner during the application As an added convenience, a cosigner may start the application first and then invite the student to join once their information has been entered Phone support is available to help applicants with questions during the application process Applicants have the option to submit the Credit Agreement and Applicant Self-Certification Form and supporting documents via e-sign, document upload online, fax or mail Title X of the Higher Education Opportunity Act Process Disclosure statements are provided in accordance with Regulation at the application, approval and final stages of the loan process as detailed below: The Application & Solicitation Disclosure is part of the online application and is presented to, and must be acknowledged by, the student and, if applicable, the cosigner. The Approval Disclosure is presented electronically once all required documentation has been received/accepted from applicants, and must also be acknowledged separately by the student and, if applicable, the cosigner. The student and, if applicable, the cosigner, have 30 days to accept the Approval Disclosure before the loan offer is withdrawn. A paper copy may also be mailed if requested by an applicant. The Final Disclosure is generated online and also mailed once the application is fully complete and approved. This is after school certification has been received. The Final Disclosure can also be ed to the applicant(s). The Final Disclosure includes loan specifics and defines the rescission period in which an applicant may cancel the loan. 4

7 Status Detail for Applicants Multiple options are available for applicants to determine the status of a loan application: Online: Applicants may access the application system via the SunTrust website (suntrusteducation.com) at any time to review application status and to identify what, if any, documentation is outstanding. /mail communications: reminders are sent to applicants every two calendar days for the first 20 days of the application period requesting missing information, such as income verification or any other documents needed to complete the loan process. If there is still outstanding information needed after this time, additional reminders are sent via and mail. Phone: The program s voice response unit is updated in order to provide up-todate inquiries via phone after normal business hours. Loan Details after the Loan is disbursed Once the loan has been disbursed, loan information, account information, and repayment information are available online through the servicer s website aessuccess.org. 5

8 National SunTrust Custom Choice Loan Statistics The sophisticated loan platform for the Custom Choice Loan enables families to select between a fixed and a variable interest rate in the same application session. In addition, by selecting from multiple repayment terms and options, families can determine the loan options that best meet their individual financing needs. The charts below represent the choices families are making. The timeframe used was July 1, 2016-September 30, 2016 and uses SunTrust Custom Choice national school channel, cosigned volume. 6

9 Custom Choice Loan Details Eligibility Borrowing Amounts 2 The Student must: Be enrolled at least half-time or more in a degree seeking program at an approved Title IV eligible school. Be a U.S citizen or permanent resident. Be the legal age of majority, or at least 17 years of age at the time of application if applying with a cosigner who meets the age of majority requirements in the cosigner s state of residence. 1 The Custom Choice Loan is not available to international students or students/cosigners whose permanent residency state is Iowa or Wisconsin. Minimum Loan Amount: $1,001 Maximum Loan Amount: lesser of the cost of attendance less aid or $65,000 with an annual maximum of $65,000 Aggregate Student Loan Limit (total amount of student loan debt allowable): $150,000 Credit Criteria The Custom Choice Loan utilizes a custom credit score that is not solely based on a commercially available credit score. Although a cosigner is not required, a creditworthy cosigner may increase the likelihood of approval. The student borrower and/or cosigner must provide proof of the income stated on the application. Credit check is valid for 120 days and the loan must be scheduled for disbursement within 150 days. Interest Rates Current variable rates range from 4.111% APR to 9.478% APR. 3 Current fixed rates range from 4.601% APR to % APR. 4 Variable interest rates are based on the One-month London Interbank Offered Rate (LIBOR) index plus a margin, adjusted monthly. The Onemonth LIBOR index is 0.875% as of January 1, Rates & Fees Interest Capitalization Interest is capitalized once prior to entering repayment of principal and interest and at the end of any deferment or forbearance period. For borrowers who elect the Immediate Repayment option, interest that accrues between the first disbursement and the final disbursement will be capitalized after the final disbursement. Fees There are no application, origination or prepayment fees for either the fixed or variable rate loan options. 7

10 Interest Rate Reduction for Automatic Withdrawal Borrowers can reduce their interest rate by up to 0.50% for automatic payments % interest rate reduction for automatic loan payment withdrawal % interest rate reduction if automatic payments are withdrawn from a SunTrust bank account. 5 Borrower Benefits Graduation Reward Upon graduation with a bachelor s degree or higher, student borrowers are eligible to request a 1% principal reduction to the net disbursement amount of the loan. Proof of graduation required. 6 Cosigner Release Cosigner release option is available to borrowers who have made ontime payments (not later than 10 days after the due date) for the first 48 consecutive principal and interest payments on-time. 7 Loan Forgiveness In the event of the primary borrower s death or total and permanent disability, the loan will be forgiven; proper documentation is required. 8 Repayment Terms Repayment Options Choice of Repayment Terms: 7, 10, or 15 year options (15 year term is only available for loan amounts of $5,000 or more). 9 Choice of Repayment Options: Full Deferment 10 Interest Only Repayment 11 Partial Interest Repayment (Student Starter) 11 Immediate Repayment 12 Grace Period The grace period is typically six months. 13 In-School Refinance Option While SunTrust does not currently offer private student loan consolidation, the Custom Choice Loan now offers the ability to refinance existing private student loans into a new Custom Choice Loan. The new loan will combine funds for the upcoming semester/academic period with the private student loans that the student wants to refinance. This feature gives the student the flexibility to select a repayment term and repayment option that is right for them now. This option is presented to applicants post-approval and lets them input the loans they d like to refinance. The school is only required to certify the loan for the current semester/academic period loan funds. For more details on this option, visit suntrusteducation.com/inschoolrefinance. 14 8

11 Deferment and Forbearance Options Fully Deferred Repayment For borrowers who elect full deferment, principal and interest payments are fully deferred for up to 66 months from first disbursement date of the loan, as long as the student remains enrolled at least half-time. Principal and interest payments begin six months after the student ceases to be enrolled half-time in a Title IV eligible school, or 66 months from the first disbursement date. Additional Deferment Option An additional 48 months of deferment is offered to borrowers who re-enroll or are continuously enrolled at least half-time in a Title IV eligible school 66 months after the first disbursement date. This option is also available to borrowers in a medical internship or residency program. The additional deferment for re-enrollment provides additional deferment to borrowers who have exhausted their in-school deferment eligibility as follows: Borrowers who elected Fully Deferred Repayment 10 may be eligible for an additional deferment period of up to 24 months of deferment from principal and interest payments and an additional period of interest only payments for up to 24 additional months (depending on length of enrollment). Borrowers who elected Interest Only Repayment 11 or Partial Interest Repayment 11 may request an additional interest only period (of full interest payments) for up to 48 additional months (depending on length of enrollment). For loans with a 7 or 10 year 9 principal and interest repayment term, additional deferment for re-enrollment shall extend the repayment period by the same number of months used by the additional deferment. In lieu of receiving written notification from the borrower, the Servicer may treat any notice of new enrollment from the School or the National Student Clearinghouse as written request for Additional Deferment and apply the deferment automatically. Alternative Repayment Options Alternative repayment options are available and provide up to 36 months of reduced payments as follows: Up to 12 months of interest only payments with equal payments of principal and interest for the remainder of the repayment term. If a borrower or cosigner requests further assistance, an additional 24 months of interest only payments is available with equal payments of principal and interest payments for the remainder of the repayment term. 9

12 Armed Forces Deferment U.S. Armed Forces service members are eligible for 36 months of additional deferment when the borrower or cosigner (if applicable) is on active duty. Hardship Forbearance Borrowers may be granted up to 12 months of forbearance for economic hardship during the life of the loan. Forbearance is granted in three-month increments. Borrowers can contact AES to request forbearance. School Processing Information for the In-School Amount Loan Amount Changes Loan amount can be changed by contacting Priority Service via phone at (866) or at Loan changes can also be submitted via your preferred CommonLine processing method. Changes to increase the certified loan amount can be made up to the approved loan amount reflected on the Credit Agreement. These changes can be made via school recertification up to 30 days after the loan is initially setup for disbursement prior to the first disbursement being funded. Disbursements Funds for Custom Choice Loans are sent to the school. Disbursements can be made daily or on specific days of the week, as requested by your office in up to four disbursements within the academic period. Before funds can be disbursed, the following will be verified: Refunds All Title X disclosures have been presented Applicant Self-Certification form has been received Student and cosigner, if applicable, have accepted the terms of the loan as identified in their Approval Disclosure School certification received Rescission period, as outlined in the Final Disclosure, has expired For full refunds, the school has 60 days from the original disbursement date to completely cancel the loan. If a full refund is received from the school more than 60 days after the original disbursement, the student is responsible for the accrued interest. 10

13 Cancellations The school, student or cosigner can cancel a specific disbursement, or the entire loan, at any time prior to the disbursement date. To refund or cancel a loan that has been disbursed via EFT, your school has two options: Return the funds via EFT Issue a check payable to SunTrust and send it to the one of the following addresses: SunTrust Custom Choice Loan Attention: Loan Disbursement PO Box Boston, MA Overnight: SunTrust Bank c/o First Marblehead Education Resources, Inc. Attn: Funding Department One Cabot Road, Suite 200 Medford, MA Please include the following information with the check: Student s name and Loan ID number Dollar amount of disbursement to be cancelled Original disbursement date Reason for cancellation 11

14 Early Awareness & Default Prevention SunTrust believes it is not only important to provide smart borrowing information at the beginning of the loan process, but to educate borrowers on their repayment responsibilities throughout the process. Historically, the student s very first payment due is often the payment that is late or missed. In the spirit of education and assisting the establishment of a positive credit history, the following plan has been developed to help borrowers understand exactly when their repayment begins and how to effectively manage private student loan debt. Early Awareness Communications, prior to first payment due date: Approximately days prior to repayment, a welcome package is mailed to all borrowers and cosigners. Approximately 30 days prior to repayment, an is sent to all borrowers and cosigners advising them that the loan is going into repayment and also explains payment options. Prior to repayment, all borrowers and cosigners are called to advise them that their loan is entering repayment. Approximately one day after the initial bill is sent, an is sent to all borrowers and cosigners advising the bill was sent and that the payment is due. Default Management AES, the Custom Choice 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 (undergrad 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. It provides information that helps schools create a default management prevention plan and educate their students about education loans and debt management to allow for a seamless transition from the classroom to the working world. Financial Wellness Curriculum: A series of PowerPoint presentations on topics that are important to today s college student, 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. This curriculum can help teach your students the basics about money management and arm them with tips and information to help them make smart, educated financial decisions. 12

15 Creating a Default Prevention Plan: Developed to assist schools in creating a default prevention plan and advising your 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 providing sample call scripts and scenarios to explore the best possible options available for dealing with delinquent student loan borrowers. Calculators and Downloadable Forms: Estimate monthly student loan payments using the calculator appropriate to the type of repayment plan. Also download and keep on hand deferment and forbearance forms for student borrowers who are interested in and qualify for deferment and forbearance options. Informative Website Among the support SunTrust provides to borrowers and financial aid officers is a comprehensive website at suntrusteducation.com. Website elements include: Custom Choice Loan information, including eligibility requirements and borrower benefits Paying for College section with resources for students and their families A step-by-step application checklist Several calculators and repayment examples FAQ and glossary of financial aid terms Money management tips, including budgeting information Federal student loan information Educational Materials for Students SunTrust has created high-quality, easy-to-read educational materials (click on Student Loan Resources & Calculators) about private student loans and the Custom Choice Loan. As part of its mission to minimize delinquency and default rates, debt management guides are also available with helpful information about budgeting, saving, and identity theft. To order any of these materials, please contact your dedicated Relationship Manager. 13

16 The SunTrust Off To College Scholarship Sweepstakes SunTrust has sponsored the Off To College Scholarship Sweepstakes for 12 consecutive years. The sweepstakes offers high school seniors and college undergraduates the opportunity to win a $500 scholarship. Entrants register online or by mail, and winners are generally chosen every two weeks from October through May. During the past eleven years SunTrust has awarded 195 scholarships to students across the United States. There is no entry fee and it is not necessary to apply for a loan in order to enter or win the sweepstakes. Eligibility is not based on GPA or financial need. To review the entry form and program details, please visit suntrusteducation.com/offtocollege for more details. 14

17 Disclosures The lender for this program is SunTrust Bank. SunTrust and Custom Choice Loan are both federally registered trademarks of SunTrust Banks, Inc. and are used with the permission of SunTrust Bank. SunTrust Bank reserves the right to change or discontinue this Custom Choice program without notice. This loan program is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions. SunTrust Bank, Member FDIC. The contents of this proposal are confidential and contain information that is proprietary to SunTrust Banks, Inc. Your school agrees that this proposal and its contents shall be maintained in confidence and may only be disclosed to employees of the school who need to know this information for the purposes of evaluating this proposal. SunTrust reserves the right to revise the proposal at any time. This proposal cannot be released beyond your institution unless so required by state or other applicable law. Before release, SunTrust requests notification so that opportunities for redaction are available to SunTrust under the prevailing statutes. EasyInvite is a registered service mark of First Marblehead Corporation. Before applying for a private student loan, SunTrust recommends comparing all aid alternatives including grants, scholarships, and both federal and private student loans. 1 The legal age for entering into contracts is 18 years of age in every state except Alabama (19 years old), Nebraska (19 years old, only for wards of the state), and Mississippi and Puerto Rico (21 years old). 2 The minimum loan amount is $1,001 with exceptions based on the student s state of permanent residence, as follows: Alaska: $5,001, Colorado: $3,001, New Mexico: $2,501, Oklahoma: $4,901, Rhode Island: $5,001, South Carolina: $3,601. The maximum annual loan amount for the upcoming semester/academic period is determined by the school s cost of attendance, minus other financial aid such as federal student loans, scholarships or grants, up to $65,000. The aggregate maximum student loan debt allowed is $150,000 (includes all student loans and certain unsecured consumer debt). 3 The variable interest rate for each calendar month is calculated by adding the current One-month LIBOR index (captured on the 25th day, or the next business day thereafter, of the month immediately preceding such calendar month and rounded up to the nearest 1/8th of one percent) to the margin. The current One-month LIBOR index is 0.875% on 1/1/17. LIBOR stands for London Interbank Offered Rate. The One-month LIBOR is published in the "Money Rates" section of the Wall Street Journal (Eastern Edition). The interest rate will be determined after the student and cosigner, if applicable, apply. The variable interest rate and Annual Percentage Rate (APR) depend upon (1) the student s and cosigner s (if applicable) credit histories, (2) the repayment option and loan term selected, and (3) the requested loan amount and other information provided on the online loan application. If approved, applicants will be notified of the rate qualified for within the stated range. Rates and terms effective for applications received on or after 1/1/17. The variable interest rate will increase or decrease if the One-month LIBOR index changes. 4 Current fixed interest rates depend on (1) the student s and cosigner s (if applicable) credit histories, (2) the repayment option and loan term selected, and (3) the requested loan amount and other information provided on the online loan application. If approved, applicants will be notified of the rate qualified for within the stated range. Rates and terms effective for applications received on or after 1/1/17. The fixed rate assigned to a loan will never change except as required by law or if the borrower requests and qualifies for the ACH reduction benefit(s). 5 Interest rate reductions offered for automatic payment from a bank account: 0.25% interest rate reduction when ACH payments are made from any bank account and an extra 0.25% interest rate reduction when ACH payments are made from a SunTrust Bank account. ACH interest rate reduction(s) apply when full payments (including both principal and interest) are automatically drafted from a bank 15

18 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 Bank account ACH interest rate reduction will be applied after the first automatic payment is successfully deducted from a SunTrust Bank checking, savings or money market account and will be removed for the reasons stated above or if the SunTrust Bank account is closed. In the event the benefit(s) is removed, the interest rate stated in the Credit Agreement shall be applied in accordance with the terms of the Credit Agreement. 6 The 1% principal reduction is based on the net disbursed loan amount, which is the total dollar amount of all disbursements made, excluding the dollar amount of any reductions, cancellations, or returns, as applicable. To receive the reward, the benefit must be requested from the servicer, the student borrower must have earned a bachelor s degree or higher and proof of such graduation (e.g. copy of diploma, final transcript or letter on school letterhead) must be provided to the servicer. This reward is available once during the life of the loan, regardless of whether the student borrower receives more than one degree. 7 Request for the cosigner to be released can be made after making (1) the first 48 consecutive monthly principal and interest payments on-time (received within 10 calendar days after the due date) or (2) an amount equal to the first 48 consecutive principal and interest payments, provided that (a) such payments are made during the first 48 months of principal and interest repayment and (b) no prior late payments were made. At the time of the request, the student borrower must be a U.S. Citizen or permanent resident alien, meet credit criteria, be enrolled for automatic deduction of monthly payments from a bank account, and have had at least one payment on the loan transferred electronically from a bank account. Cosigner release may not be available for loans in a forbearance status. 8 If the student borrower on a loan dies after disbursement of all or part of the loan and the loan has not previously become a charged off loan due to non-payment or bankruptcy, then the outstanding principal and accrued interest balance on such loan shall be forgiven if the servicer is informed of the student borrower's death and receives acceptable proof of death. If the student borrower on a loan becomes totally and permanently disabled and the loan has not previously become a charged off loan due to non-payment or bankruptcy, the student borrower may apply to have the loan balance discharged by completing a discharge application. If the student borrower dies or becomes totally and permanently disabled prior to the full disbursement of the loan, and the loan is forgiven, all future disbursements will be cancelled. 9 Payment examples (all assume 45-month deferment period and a six month grace period before entering repayment): 7 year term: $10,000 loan disbursed over two transactions with partial interest repayment; with a 7-year repayment term (84 months) and a 7.129% APR would result in a monthly principal and interest payment of $ year term: $10,000 loan disbursed over two transactions with partial interest repayment; with a 10-year repayment term (120 months) and a 7.666% APR would result in a monthly principal and interest payment of $ year term: $10,000 loan disbursed over two transactions with partial interest repayment; with a 15-year repayment term (180 months) and an 8.218% APR would result in a monthly principal and interest payment of $ Payments may be deferred (a) while a student is enrolled at least half-time at an approved school, and (b) during the 6 month grace period after graduation or dropping below half-time status, but the total initial deferment period, including grace period, may not exceed 66 months from the first disbursement date. Any accrued but unpaid interest will be capitalized (added to the unpaid principal loan balance) when repayment of principal and interest begins. There are no prepayment penalties. 11 Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. Partial Interest Payment plan of $25 per month is available on loans of $5,000 or more. Payment example (assumes a 45-month deferment period and a six month grace period before entering repayment): $10,000 loan disbursed over two transactions with partial interest repayment; with a 10- year repayment term (120 months) and a 7.663% APR would result in a monthly principal and interest payment of $

19 12 The first payment of principal and interest will be due approximately calendar days after the final disbursement date. The minimum monthly payment is $ Choosing the immediate repayment option will apply to the new loan in full, including, if applicable, any existing private student loans refinanced into the new loan. 13 Typically the grace period is six months from (a) the date the student graduates, (b) the date the student drops below half-time status or (c) the date that is 60 months from the first disbursement date. The immediate repayment option does not have a grace period. 14 When choosing to refinance, the terms of the new loan may or may not be as favorable as the terms of the existing loan(s). Before agreeing to refinance, SunTrust encourages you to compare the terms (such as interest rate, total loan cost and borrower benefits) of the existing loan(s) to the terms of the new loan(s). Visit suntrusteducation.com/inschoolrefinance to learn more about things to consider about refinancing. 17