oversight

COD Processing Capacity - Date Issued: 06/30/2010 PDF (39K)

Published by the Department of Education, Office of Inspector General on 2010-06-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         UNITED STATES DEPARTMENT OF EDUCATION
                                OFFICE OF INSPECTOR GENERAL

                                Office for Information Technology Audits and Computer Crime Investigations



MEMORANDUM

DATE:          June 30, 2010

TO:            Daniel T. Madzelan
               Delegated the Authority to Perform the Functions and Duties of the
               Assistant Secretary for Postsecondary Education

               William J. Taggart
               Chief Operating Officer
               Federal Student Aid

FROM:          Charles E. Coe, Jr. /s/
               Assistant Inspector General
               Information Technology Audits and Computer Crime Investigations
               Office of Inspector General

SUBJECT:       Technical Assessment Review of the William D. Ford Federal Direct Loan
               Program’s Origination Process


The purpose of this memorandum is to provide the Department with the conclusion of our
technical assessment of the William D. Ford Federal Direct Loan origination process. Our
assessment evaluated the adequacy of both capacity and contingency planning to address the
expected increased loan originations resulting from the enactment of the Student Aid and Fiscal
Responsibility Act (SAFRA) on March 30, 2010, Public Law 111 – 152. A Direct Loan
origination is the process by which a school reports to the Common Origination and
Disbursement (COD) system that it is submitting loan award information. We did not examine
Federal Student Aid’s (FSA) ability to process Master Promissory Notes, verify PINs, or deliver
loan funds for the increased number of Direct Loan borrowers. Problems with any of these
systems could significantly affect FSA’s ability to make and deliver Direct Loans to new
borrowers.

Our review consisted of consultation with FSA management, support staff, and the primary
support contractor, as well as the assessment of related technical documentation. We reviewed
the COD system configuration documentation and current and historical system activity reports,
System Delivery Standards, and scheduled and non-scheduled system downtime reports. We
assessed the ability of the COD system to satisfy storage, volume and network bandwidth
capacity requirements based on FSA’s estimate of 30.3 million originations during FY2010. The
estimated 30.3 million originations also include all Pell Grants and other types of Title IV grants
to be awarded during FY2010. The projected disk storage required to process the 30.3 million
originations will equate to a total capacity of 4.3 terabytes, which is adequately within the COD
system’s available disk storage of 5.8 terabytes. Additionally, the network bandwidth has been
significantly increased from 9MB to 45MB to allow for a much higher rate of volume. We did
not perform validation testing to confirm accuracy of system documentation or FSA’s
explanation of how the processes work.

Historically over 90 percent of all direct loan originations are generated by schools that then
transmit in batch mode to their Student Aid Internet Gateway (SAIG) mailbox. The origination
data within these nationwide mailboxes are read and downloaded into the COD system multiple
times on a daily basis. Normally, these transactions are processed by the COD system within
one to two hours of submission. However, those batch processes can be delayed for up to 12
hours if necessary, with a Service Level Agreement allowing up to a 72-hour delay. For
example, a typical batch processing hour may equate to a receipt of 750 batches (e.g. each batch
comprising of multiple originations from a school) via SAIG. However, if the transmitted
batches received were to increase to an abnormal rate of a hypothetical three thousand batches
per hour, the COD asynchronous batch processing architecture would allow the system to throttle
down the processing of the submitted batches to a level that existing capacity can handle. That
is, the three thousand batches would be placed in a queue and processed in an orderly manner
over a period of time. It is this existing automated schedule process part of the batch process that
offers assured flexibility that all originations are processed without negatively impacting system
capability. FSA has stated it plans to notify all COD users of the possible batch processing
delays during the summer spike.

We analyzed the estimated COD origination projections for accuracy and reasonableness. The
estimated COD origination projection of 30.3 million for FY2010 was supported and appeared to
have a reasonable basis in the methodology used. We also reviewed the current COD
contingency plan and the results of the most recent COD disaster recovery test enacted on
November 9, 2009. If FSA’s estimate of 30.3 million originations is accurate and its
contingency plans are implemented as written, it appears that the level of risk in exceeding
Direct Loan origination capacity is low.

However, we are concerned about the actual origination volume compared to the projected
monthly activity. The monthly activity for the first four months (October 2009 through January
2010) showed that 4.37 percent fewer applications were received than were projected to be
received. The most recent four months (February through May 2010) showed that 21.6 percent
more applications were received than were projected to be received. FSA estimates that most of
the originations will occur in the July through September timeframe, representing more than 18.5
million projected origination records. FSA should promptly review the actual numbers for June
when they are available. If FSA identifies a continuing significant increase in applications
received over applications projected, it should review the volume capacity and revise
accordingly.

In response to our concerns, FSA officials stated they monitor the origination counts on a daily
basis, and that they are currently tracking very close to the projected total originations, despite
the month to month variances we noted. FSA believes that the higher percentage increase in the
months of February through May 2010 was an indication that former FFEL schools perceived
SAFRA legislation to be imminent after January 2010.