The Solution: Participating in the Direct Loan Program

On March 10, 2008, after meetings at the executive level including Enrollment Management, Finance and Business, and Information Technology Services (ITS), Penn State announced that it would become a Federal Direct Student Loan Program participant. President Spanier committed the resources needed to make the change. The University had four months to make the conversion in time to provide funds for the summer 2008 semester starting July 1.

On March 11, a team of 20 people charged with implementing the change held their first meeting and reviewed their task list. The team included staff from Student Aid, the Bursar’s office, and Administrative Information Services (a unit of ITS), as well as Anna Griswold, the Assistant Vice President for Undergraduate Education and Executive Director, Office of Student Aid and Roseann Sieminski, Assistant Controller and Bursar. Actions and items on the task list were divided into those that were core and those that could be later enhancements. The team then met weekly on Mondays to review progress. Schedules for routine work that usually involves all in Student Aid, such as responding to calls and e-mails from students and families, was redistributed to allow those deeply involved in the Direct Loan change to focus their time there. Technical staff met during the week as needed to develop the programs and procedures for data transfer between Penn State and the U.S. Department of Education. At the same time, Student Aid staff developed and implemented a communication plan, with most of the information provided online. What would students and their families need to know about the changes to the process, and when would they need to know various items? The 38,000 students with loans from PHEAA would need to sign a new promissory note.

Anna Griswold and Roseann Sieminski met monthly with the Senior Vice President for Finance and Business/Treasurer, the Vice President and Dean for Undergraduate Education and others to inform them of the progress both on the task list and on the communications with students and families. One measure of progress and effectiveness was the number of the 38,000 students who had signed new promissory notes.

Team leaders and members celebrated major milestones. The transition was completed in time for the summer 2008 semester. Following the full conversion in the fall, the accomplishment was recognized with a luncheon hosted by Anna Griswold and Roseann Sieminski and the group was joined by Dr. Spanier.

What made it possible? Adjusting to new programs and procedural changes is a fact of life for the staff at Student Aid. Student Aid is organized in a team structure, and has for a long time embraced the spirit of Continuous Quality Improvement and the related process analysis and change management. All of those who would be impacted by the change, including all of the units within Student Aid, were at the table for the weekly meetings. Student Aid also has a long collaborative relationship with the Bursar's office staff. Additionally, communication, both within the University and to students, was a part of the change from the beginning. Finally, Penn State’s automated student aid system was developed and is maintained by Office of Student Aid staff and programmers and supported by Administrative Information Services (AIS) so they were not dependent on the availability of external programmers to make the changes.

The most obvious benefit of the change was that student loans continued without interruption. But there were also operational benefits for the students and Penn State. With the Direct Loan Program as a single lender, there is just one process for Student Aid to manage for all students. Penn State has more control over the loans, and can more easily adjust the amount of loans, within prescribed limits, and can more easily reconcile disbursement. Time for the University to actually receive the funds is two days less than with individual lenders. As Anna Griswold stated, “What benefits students also makes Student Aid more effective.”

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For more information about Direct Student Loans, visit http://www.psu.edu/studentaid/aidprog/loans.shtml?reload . For more information about how Penn State made the change, contact Anna Griswold, Assistant Vice President for Undergraduate Education and Executive Director, Office of Student Aid, amg5@psu.edu.

March 2010