Question-and-Answer Session
Operator
(Operator Instructions) Your first call comes from Sara Gubins of Merrill Lynch.
Sara Gubins - Merrill Lynch
Can you talk about what is involved in getting the schools up and running on the Direct Loan Program?
Jack Massimino
The Direct Loan Program is not that difficult a process. You have to go through a little of administrative procedure just to get them coded appropriately. The biggest issue for us wasn’t in dealing with the Department of Education, it was dealing with our third party processor that we use that packages our loans and then submits them to the Department of Education.
We had to make a few changes to their software package so that it would be able to flow just as if we were dealing with Sallie Mae or any other third party private lender.
We have now done that; we have a fix in place and, as we mentioned earlier, we have now 26 schools that have the ability to do direct lending. In addition, Global, our outside third party processor had to staff up during that period. We had a combination of a little bit of training, some software development that we had to do; but, dealing with the Department of Education hasn’t been complicated at all.
Peter Waller
I will just add, the operation at the School level, it is pretty straight forward because it works with a third party and once the third party got the software packaging in place from the school’s point of view, this is fairly seamless.
Sara Gubins - Merrill Lynch
If you did have to move to direct lending for all of your schools, what would be the incremental cost?
Jack Massimino
There is a processing cost associated with it; it is around 10 to $11 per file that we push through. There is a little incremental cost that would be included.
Operator
Your next call comes from Trace Urdan - Signal Hill Group.
Trace Urdan - Signal Hill Group
One of you mentioned that the reason for the more sober dark guidance heading into the fourth quarter has to do with the transition from Sallie Mae to the new lending regime and that you didn’t really have enough experience to get a good fix on that, given the very strong student starts in the quarter, I am wondering what that maybe supposes for the trend from January, February and March. I was wondering if you could talk to us about how this start played out during the quarter as you made that transition and whether maybe the March starts are significantly lower than where the January starts were.
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