Breakthrough

Performance at FSA
Theresa S. Shaw
Chief Operating Officer
Federal Student Aid
May 26, 2004

Presentation at GSA/American Council for Technology sponsored

“Management of Change” Conference. Panel discussion on
breakthrough performance in the public/private sector.

Management of Change
 Who We Are…
Federal Student Aid (FSA) administers and
operates the annual $60 billion Title IV
student aid programs for the Department of
Education. In 1998, FSA became the
government’s first performance based
organization (PBO).
‰ $321 billion outstanding loan
Billions of portfolio
Transactions ‰ 23.6 million borrowers
Industry-wide ‰ 13 million aid applicants annually
Management of Change 2
 What We Do…
We deliver over $60 billion in aid each year to 13
million aid applicants, including nearly 12 B in Pell
Grants to the most needy students, through & with:

6,130 Schools 3,600 Lenders

36 Guaranty Agencies 36 Secondary Markets

27 3rd-Party Servicers
Management of Change 3
Why We Matter?
Education – A National Priority
‰ Federal student aid programs support the President’s
goals for the nation
‰ Substantial and on-going public support for federal
financial assistance for higher education
The Business Imperative
‰ Delivery of student aid is not optional
‰ Consistent increases in demand for FSA’s services
and in the scope of our activities
‰ PBO legislation raised the expectations of FSA

Management of Change 4
What Does Being a PBO Mean?
PBO: Raising the Bar
Management agrees on performance goals for achieving
specific results:
‰ Improve service to students
‰ Reduce costs
‰ Increase accountability
‰ Integrate information systems
‰ Implement common integrated delivery system
‰ Strengthen program integrity

Management of Change 5
What are the Challenges?
Challenges to Meeting the Raised Bar
‰ Many masters, many goals
‰ Limited budgetary, personnel
and procurement flexibilities
‰ Must align the speed of
advancement and innovation
with customer and partner
capabilities

Management of Change 6
What Did We Do?
That Said, FSA…
Organized around our customers instead of our programs by:
‰ Transforming the financial aid process from paper to
electronic – from aid awareness, to application, to
repayment – all while ensuring uninterrupted access to
student aid programs
‰ Implementing e-business solutions for schools and
financial partners
‰ Reducing default rates to historic lows
‰ Optimizing our default collection practices resulting in
increased recoveries
‰ Continuing to overhaul our remaining legacy systems

Management of Change 7
 What Does that Mean?
Customer Service

Organizing around our customers

Getting the Right Aid to the Right Student at the Right Time

Management of Change 8
What Did We Develop?
FAFSA on the Web Student Aid on the Web
(Free Application for Federal
Student Aid)

http://www.fafsa.ed.gov http://studentaid.ed.gov
Management of Change 9
What Was Our Development
Methodology?
Career Staff Leadership and Involvement
‰ Market Research
‰ Focus Groups
‰ Beta Test
‰ More Focus Groups
‰ Customer Feedback Mechanisms
‰ Continuous Improvement

Management of Change 10
How Are We Doing?
Student Eligibility: FAFSA
16

14
2.6
2.7
12
3.6 WE PROCESS
10

8
5.7
4.8
nearly 800,000
6
8.0 7.9 7.5
7.0
6.3
11.0 11.8 APPLICATIONS
4
7.3
9.5 IN A PEAK
2
3.2 4.2
5.7 PROCESSING WEEK.
1.7 1.9 2.4
0
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04* 2004-05* 2005-06*

Electronic Paper * Projected

ƒƒ 13+
13+ million
million FAFSA
FAFSA forms
forms submitted
submitted
ƒƒ 78% completed electronically
78% completed electronically
ƒƒ Electronic
Electronic process,
process, including
including changes,
changes, usually
usually completed
completed in in less
less than
than aa day
day
ƒƒ The
The paper
paper process,
process, including
including changes,
changes, typically
typically takes
takes less
less than
than three
three days
days
ƒƒ 8.9
8.9 million
million changes
changes areare made
made to to previously
previously submitted
submitted applications
applications by by schools
schools and
and applicants
applicants
ƒƒ Use
Use of
of the
the online
online change
change process
process has has increased
increased nine
nine fold
fold over
over the
the last
last four
four years
years (3%
(3% to
to 26%)
26%)
ƒƒ Paper
Paper process
process reject
reject rate
rate is
is about
about 8%8%
ƒƒ Electronic
Electronic process
process reject
reject rate
rate is
is less
less than
than 1%
1%

Management of Change 11
12
13
14
15
16
17
18
19
How Successful Are We?
n Improve service to Reduced processing time from days
to hours and enabled one stop
students
shopping
Eliminated costly paper process;
o Reduce costs
78% of FAFSA’s are completed
electronically

p Increase accountability Getting the right aid to the right

student at the right time

q Integrate information Simplified the process for students

systems and families
r Implement common Integrated preparing and planning
integrated delivery phases with the actual application
system process (FAFSA)
Improved data quality - Electronic
s Strengthen program process reject rate is less than 1% -
integrity our data checks are working
Management of Change 20
What Do Our Customers Say?
Customer Visits
‰ 613,092 unique visits to FAFSA on the Web for March 2, 2004 (peak
processing day)
‰ 10 million plus hits hourly
‰ Student Aid on the Web receives two million monthly hits; four
million page views
Survey Says
‰ 2003 ACSI Customer Satisfaction Survey
‰ FAFSA satisfaction scores better than Yahoo…only Amazon.com
scores were better
Awards
‰ Federal Leadership Council’s Showcase of Excellence Award
‰ Student Aid on the Web (http://studentaid.ed.gov)
‰ Award Finalist for Government Solutions Center Pioneer Awards
Winner
‰ FAFSA on the Web (http://www.fafsa.ed.gov)

Management of Change 21
Breakthrough Performance
Continues…
‰ Common Services for Borrowers – integrating
four different systems to provide a streamlined
repayment process for our customers
‰ Data Strategy – ensure consistency and
accuracy of the billions of transactions we
complete everyday
‰ Front-End Business Integration – further
integrating our delivery systems to develop the
“ultimate customer service experience” not only
for our borrowers but for our industry partners as
well
Management of Change 22
 Questions?

This presentation is available at:

http://ifap.ed.gov/IFAPWebApp/currentCPresentationsPag.jsp

Management of Change 23