Responses to questions submitted by prospective bidders:

Please note: Questions that were similar were combined, and therefore not every question is repeated or answered. For any aspect of a question not directly answered, data was not available or FAME has elected not to provide that information.

Why has FAME decided to issue this RFP for collection services? Is there a current contract in place that is expiring?

Current vendor is exiting the business.

What has been FAME’s experience with external collections up until now? If collection agencies are/have been used, which ones and what are/were the contracted fee rates?

FAME has engaged the collection services of Credit Control and Daggett & Parker, who have been in place for in excess of 5 years. Contract fee rates have ranged from 15% to 30%.

Please confirm that FAME is not required to be licensed or registered as a student loan servicer.

Confirmed for State of Maine’s Consumer Credit Code.

Please confirm that FAME is excluded from being classified as a private education lender.  

Confirmed for State of Maine’s Consumer Credit Code.

What is the anticipated award date?

Within 60 days of proposal deadline

What is the preferred go live date?

As soon as possible.

In cases where an alternative pricing structure may benefit FAME, may we proposal alternate to the straight $ amount currently referenced on the Cost Proposal?

Yes

When remitting borrower payments, does FAME expect to be made whole? If yes, please clarify whether the fee we propose in our RFQ response should reflect the:

• Add-on rate applied to the loan balance at placement, or
• Contingency rate retained by the collection agency from recovered amounts while remitting the full underlying balance to FAME.

To illustrate the difference between the add-on and contingency rates please consider the following example: A $1,000 balance is assigned and a 25% collection cost (A) amounting to $250 is added, resulting in a new total of $1,250. The agency recovers the full $1,250 and retains a 20% contingency fee (B) on the total amount collected amounting to $250, then remits the full original balance of $1,000 to FAME.

Since depending on loan type collection costs may be limited or prohibited by law, a rate applicable to all loans is preferred, with structure of adding to loan balance determined on loan by loan basis-but collector to earn fee regardless of whether chargeable to borrower.

When a loan is placed for collection, is the collection agency’s contingency fee added to the balance as a collection cost, to be paid by the borrower?

Yes, when permitted by law.

Is FAME seeking a tiered contingency fee structure based on placement type, such as firsts, seconds, litigation?

Negotiable.

What were the total fees ($) paid to or retained by the current collection vendors during the most recent 12-month period?

Approximately $200,000.

Of the $80MM of educational loans, what is the current total # and $ amount of defaulted loans? 

Actual full portfolio of FAME loans closer to $120MM—including loans not in repayment status, not in default, etc.

Estimated placements of defaulted loans with new provider:

• Second placements: 180 accounts – $2,821,769 (previously placed with 1 to 3 different agencies) These loans are not actively under payment arrangements.
• Initial placements: 21 accounts – $304,166.35 (defaulted between 1/1/2026 and contract award date not yet placed with any agency)

Historically, what is the # and $ value of accounts that default annually?

Average monthly first placements – 3 to 4 loans at $15,000 each

How frequently will FAME assign new placement batches?

Once or twice per month.  For clarity purposes, loans are not “assigned” to collector, in the ownership sense, but referred for collection activity.

What is the average balance of accounts to be placed for collections?

• Second placements: $15,676 average P&I
• First placements: $14,484 average P&I

What is the average loan ratio per borrower?

1.5 loans per borrower

For the most recent 12-month period available, how many loans were approved for and proceeded to litigation?

Data is not readily available. Approximately 26% of present defaulted portion of loan portfolio have progressed to court judgement.

What resolution options are available for these loans (e.g., rehab, consolidation, forgiveness, etc.)?

Settlement arrangements: either lump sum, standard or graduated monthly payments with possible balance forgiveness at the end.  Settlement arrangements must be approved by FAME.

Is credit reporting permitted/desired?

Permitted.

How long is the collection agency allowed to retain and continue working loans before they must be returned to FAME?

Term of contract with option for FAME to recall under certain circumstances.

Please confirm that digital communications (email, SMS, etc.) are acceptable.

Confirmed.

Please confirm that remote staff servicing the portfolio is acceptable.

Possibly. We would want you to provide information on security, oversight, and training for those who would be providing responses to customer inquiries.

Is nearshore service acceptable?

Possibly. We would want you to provide information on security, oversight, training, and your assessment of verbal and written language for those who would be providing responses to customer inquiries

At what point of delinquency are accounts placed, and have they been previously placed with another agency (first placement versus secondary)?

There are possibly three different loan program types that could be placed for collections. 

Program Type 1: Defaulted Tax-exempt bond financed Private Education Loans—The Maine Loan, Maine Medical Loan, and Maine Consolidation Loan. These default after 180 days of delinquency. 

Program Type 2: Defaulted Private Education Loans purchased from a bank or credit union by FAME per a guarantee agreement.  These default after 150 days of delinquency.

Program Type 3: Defaulted State Appropriation Funded Private Education Loans. These default after 150 days of delinquency.

Is there a current or incumbent collections vendor, and can FAME share historical recovery or liquidation rates on this portfolio to help benchmark expectations?

Most of our second-placement loans are currently placed with Daggett & Parker for collection services. This vendor is exiting the business and those accounts not currently in an active repayment arrangement (approximately $2.8MM) will be moved to the newly selected vendor, with Daggett & Parker retaining those other accounts under active repayment plans. Many of accounts to be initially placed with the new vendor have previously been placed with one or more collection agencies and, in some cases, have been through two or three prior placements before being referred to Daggett & Parker.

The 21 loans identified for initial placement are currently being managed by FAME and are awaiting assignment to an external collection agency.

For context, FAME’s overall education loan portfolio maintains a default rate of approximately 4%. Historically, our collection efforts have resulted in recoveries of approximately 45% of defaulted principal balances, reflecting the value of active and sustained collection activity throughout the life of a defaulted account.

Does FAME prefer a single blended contingency rate or tiered pricing, and for accounts referred to litigation, are court costs advanced by the agency and reimbursed from recoveries, or paid directly by FAME?

Historically, collection agencies have been compensated on a contingency basis, retaining a percentage of amounts collected. The fee structure typically varies based on the status of the placement (e.g., initial placement versus subsequent placement). Court costs are generally advanced by the agency and then reimbursed from recoveries.

That said, we are open to considering alternative fee arrangements and would welcome the opportunity to discuss other approaches that may better align with our objectives.

What is the anticipated contract term, and will this be a single award or multiple awards?

FAME anticipates awarding a contract for an initial three-year term, with the option to extend the agreement for up to two additional one-year periods, subject to mutual agreement and satisfactory performance.

The contract may result in either a single award or multiple awards, depending on the proposals received and FAME’s determination of the approach that best serves the portfolio.

The selected agency can expect an initial placement of a significant group of defaulted loans, followed by ongoing monthly placements of newly defaulted accounts. The volume of monthly placements will vary and may range from a single loan to ten or more loans in a given month, depending on portfolio performance and default activity.

Please clarify the submission requirements. Will a proposal be considered responsive if it is structured as follows:

• Transmittal Letter
• Executive Summary
• Section 1: Organization Qualifications and Experience
• Section 2: Pricing Structure (“Cost Proposal” form on RFP page 10)
• Section 3: References
• Exhibit A – Vendor Proposal and Certification
• Exhibit B – Cyber Risk Management Questions
• Requested Attachments

Yes.

Would FAME like bidders to include a description of our technical approach or collection methodology? Or are company qualifications and experience all that is necessary to make an award decision?

Additional details beyond those requested in our RFP are acceptable. Approach and methodology information is helpful.

Does FAME expect Bidders to provide a workplan, technology and security, contract management, reporting & performance management, and/or staffing/key personnel as a part of our Collection methodology?  

Not required but would be helpful.

What evaluation weight will be given to agencies with legal proceeding capabilities?  

Not separately weighted.

Does FAME intend to hold interviews/presentations with Bidders? If so, what is the estimated timeline? Will you require in-person interviews or will TEAMS meeting or other virtual interview be considered? 

Not determined, but if held, virtual will be used.

Please confirm whether FAME has required hours of operation for collection activity or borrower support.

No specific hours required.

Are accounts expected to be segmented into separate placement categories based on factors such as loan program, account age, balance, presence of a cosigner, owner agency, or stage of collection? If so, please provide the anticipated account volume, dollar value, and average balance for each category.

Segregation is not anticipated. However, different programs have different loan parameters, including whether collection costs are limited or prohibited, so differing treatment is required.

Of the accounts expected to be placed, approximately what percentage involve:

• A borrower only;
• A borrower and cosigner;
• A borrower or cosigner currently residing in Maine; and
• A borrower or cosigner residing outside Maine?

This data is not readily available. However, most loans are credit based and have at least one co-borrower. Some are not and have borrower only. Our loans require a Maine nexus, so all loans have at least one Maine connected person at origination, but numbers of residents pre and post origination is difficult to estimate. Most, but not all, loans have at least one Maine resident.

May bidders propose different contingency rates based on account category, account age, litigation status, or other defined placement characteristics, or does FAME prefer a single rate applicable to all accounts?

Bidders may propose any rate structure.

Because proposals will become public records following the award decision, please confirm whether bidders may identify narrowly defined trade-secret, security-sensitive, or otherwise legally protected information and provide a redacted public version of the proposal.

Bidders may request confidentiality, but such requests must be narrow and clearly identify how such data qualifies as confidential under our public records laws, and we cannot guaranty confidential treatment by FAME or the Courts. Bidder should refer to our confidentiality statute, 10 MRSA Section 975-A.

The RFQ states that FAME prefers a provider capable of initiating and prosecuting judicial collection proceedings in Maine. Please clarify whether bidders should include proposed litigation-related contingency fees, attorney fees, court costs, and other legal expenses in the pricing proposal.

Bidders may propose different fees for litigation required accounts, including the handling of out of pocket costs of bidder, etc.

Will the awarded provider have authority to recommend accounts for litigation, subject to FAME’s approval, or does FAME anticipate establishing specific litigation referral criteria?

FAME prefers to approve litigation initiation.

May a bidder satisfy the preferred Maine judicial-collection capability through qualified retained counsel?

Yes, but any counsel representing FAME must be approved by FAME and the Maine Attorney General.

For accounts approved for litigation, are attorney fees, court costs, service fees, and other expenses recoverable from the borrower when permitted by the loan documents and applicable law, or must those expenses be absorbed by FAME or the awarded provider?

When permitted by the loan documents and the applicable law, recovery from borrower is encouraged. When not permitted, or not economically possible, those costs are either absorbed by (or shared between) FAME and the vendor, depending on proposal.

Does FAME expect the awarded provider or its legal counsel to appear in person for judicial collection proceedings, hearings, or related court activities?

Whatever the applicable court requires.

Please describe the servicing and collection efforts generally completed before an account is referred to the outside collection provider, including the approximate number and types of notices, telephone attempts, electronic communications, or other contacts.

Generally, the original servicer does routine default prevention efforts including correspondence and potentially phone calls. Thereafter, a series of default notices are then provided, with opportunities to cure. At that point they are referred to collection provider.

Will interest, late charges, collection costs, or other contractual charges continue to accrue after placement? If so, please describe which charges may accrue and whether FAME or the awarded provider will be responsible for calculating and applying them.

Yes. Charges continue to accrue, and where permitted are added to balance. FAME or the provider can calculate, but coordination is required to ensure legal accuracy.

How long may the awarded provider retain and actively work an account before FAME may recall or reassign it? Please identify any circumstances that would result in an earlier recall.

There is no set timeline for retention with provider.  Generally, accounts will not be recalled unless there has been no activity by provider, until contract end. However, occasionally accounts are recalled when borrower is eligible for forgiveness rather than repayment, in which case bidders could propose a “recall fee”.