As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 3/16/06  GCO Education Loan Fundi..Trust-I 10-K       12/31/05    7:51                                     Merrill Corp-MD/FA
          Gco Elf LLC

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report Pursuant to Section 13 and 15(D)      HTML     82K 
 2: EX-31.1     302 Certification                                   HTML     10K 
 3: EX-35.1     Servicer Compliance Statement                       HTML     15K 
 4: EX-35.2     Servicer Compliance Statement                       HTML     15K 
 5: EX-99.1     Miscellaneous Exhibit                               HTML     13K 
 6: EX-99.2     Miscellaneous Exhibit                               HTML     27K 
 7: EX-99.3     Miscellaneous Exhibit                               HTML    116K 

 

 Independent Accountants’ Report

The Board of Directors

Affiliated Computer Services, Inc.

Education Services

Long Beach, California

 

We have examined management’s assertions, included in its representation letter dated October 14, 2005 that Affiliated Computer Services, Inc. (ACS) Education Services complied with the following compliance requirements specified in the Audit Guide, Compliance Audits (Attestation Engagements) for Lenders and Lender Servicers Participating in the Federal Family Education Loan Program (the Guide) issued by the U.  S.  Department of Education, Office of the Inspector General, dated December 1996, relative to ACS Education Services’ administration of the Federal Family Education Loan Program on behalf of its lender clients during the year ended June 30, 2005 and that ACS Education Services maintained effective internal control over compliance with the aforementioned compliance requirements as of June 30, 2005:

•                                          Support for LaRS

•                                          Documentation

•                                          Payment of Loan Origination Fees

•                                          Interest Benefits - Eligibility, Proper Rate and Proper Calculations

•                                          Special Allowance Payments - Eligibility and Proper Calculation of Average Daily Balances

•                                          Accurate Loan Principal Balances

•                                          Reporting of Sales, Purchases and Transfers

•                                          Recording of Student Status Changes

•                                          Payment Processing

•                                          Due Diligence in the Collection of Loans

•                                          Timely Filing of Claims

•                                          Curing Due Diligence/Timely Filing Violations

As discussed in that representation letter, management is responsible for ACS Education Services’ compliance with - and the effectiveness of ACS Education Services’ internal control over compliance with - those requirements.  Our responsibility is to express an opinion on management’s assertions about ACS Education Services’ compliance with - and the effectiveness of ACS Education Services’ internal control over compliance with - the specified compliance requirements based on our examination.

Our examination was made in accordance with attestation standards established by the American Institute of Certified Public Accountants, Government Auditing Standards, issued by the Comptroller General of the United States, and the Guide and, accordingly, included examining, on a test basis, evidence about ACS Education Services’ compliance with those requirements; obtaining an understanding of the internal control over compliance with the specified compliance requirements; testing and evaluating the design and operating effectiveness of the internal control; and performing such other procedures as we considered necessary in the circumstances.  We believe that our examination provides a reasonable basis for our opinion.  Our examination does not provide a legal determination on ACS Education Services’ compliance with specified requirements.

Because of inherent limitations in any internal control, errors or irregularities may occur and not be detected.  Also, projections of any evaluation of the internal control over compliance with the specified requirements to future periods are subject to the risk that internal control over compliance may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

October 14, 2005

Guarantor and Lender Oversight Staff

US Department of Education

600 Independence Avenue, SW

Room 4624, ROB-3

Washington, D.C.  20202-5132

 

We, as members of Affiliated Computer Services, Inc.  (ACS) Education Services are responsible for complying with the requirements of the Federal Family Education Loan (FFEL) Program.  We are responsible for, and we have established and maintained, an effective internal control structure over FFEL Program requirements.  We have performed an evaluation of ACS Education Services compliance with the following requirements of the FFEL Program during the year ended June 30, 2005.  Based on this evaluation, we assert that during the year ended June 30, 2005, ACS Education Services has materially complied with the FFEL Program requirements below relative to those services provided to our clients.

•                                          The loan information (loan types, interest rate, beginning and ending principal loan balances), and loan status (past due, in grace, in deferment) reported in Parts I, II, IN, IV, and V of the Lenders  Interest and Special Allowance Request and Report- LaRS, prepared by ACS Education Services  and submitted to ED on behalf of our lender clients or the billing information prepared by Education Services and submitted to our lender clients during the year ended June 30, 2005 agrees with ACS Education Services summary records/ledger and as of June 30, 2005, ACS Education Services had effective internal control over compliance with the requirements that such information be in agreement.

•                                          ACS Education Services supported loans reported in LaRS prepared by ACS Education Services and  submitted to ED on behalf of our lender clients or the billing information prepared by ACS Education Services and submitted to our lender clients during the year ended June 30, 2005 with - and as of June 30, 2005, ACS Education Services had effective internal control over compliance requirements  for supporting loans with - loan records that include all applicable documents listed in Section II, Compliance Requirements 2, of the Audit Guide that our lender clients have contracted with ACS Education Services to store.

•                                          During the year ended June 30, 2005, ACS Education Services completely reported, classified and computed, in accordance with LaRS instructions - and as of June 30, 2005, ACS Education Services  had effective internal control over compliance with LaRS instructions for classifying and computing - the loan origination information reported in Part I of LaRS prepared by ACS Education Services and  submitted to ED on behalf of our lender clients or the billing information prepared by ACS Education  Services and submitted to our lender clients.

•                                          Loans included in Part II of LaRS prepared by ACS Education Services and submitted to ED on behalf of our lender clients or the billing information prepared by ACS Education Services and  submitted to our lender clients during the year ended June 30, 2005 were - and as of June 30, 2005,  ACS Education Services had effective internal control over compliance with requirements that loans are (1) in a status eligible for interest benefits, (2) assigned the correct interest rate in accordance with Section 427A(a)-(i) of the HEA, as amended, and (3) classified in the correct interest rate category in accordance with LaRS instructions.  Ending principal amounts, average daily balances, and interest amounts were calculated in accordance with - and as of June 30, 2005, ACS Education Services had effective internal controls over compliance with  requirements for calculation in accordance with - LaRS instructions.

•                                          Loans included in Part III of LaRS prepared by ACS Education Services and submitted to ED on behalf of our lender clients or the billing information prepared by ACS Education Services and submitted to our lender clients during the year ended June 30, 2005 were, - and as of June 30, 2005, ACS Education Services had effective internal control over compliance with requirements that loans are - (1) in a status eligible for special allowance and (2) properly categorized on the LaRS in accordance with the LaRS instructions.  Ending principal balances, average daily balances, and adjustments for differences in average daily balances were calculated in accordance with - and as of June 30, 2005, ACS Education Services had effective internal controls over compliance with requirements for calculation in accordance with - LaRS instructions.

•                                          In Parts IV and V of LaRS prepared by ACS Education Services and submitted to ED on behalf of our lender clients or the billing information prepared by ACS Education Services and submitted to our lender clients during the year ended June 30, 2005, ACS Education Services properly classified and accurately reported - and as of June 30, 2005, ACS Education Services had effective internal control over compliance with requirements to properly classify and report - loan principal balances in accordance with the LaRS instructions and included all outstanding loans (except those for which the guaranty was voided are not included in Parts IV and V.)

•                                          Loan purchases and sales made on behalf of our lender clients during the year ended June 30, 2005 were recorded by ACS Education Services in accordance with - and as of June 30, 2005, ACS Education Services had effective internal control over compliance for recording loan purchases/sales in accordance with applicable loan purchase/sale instructions provided to ACS Education Services by their lender clients with respect to the start/end date of eligibility for interest, special allowance and responsibility for payment of loan origination fees.  During the year ended June 30, 2005, ACS Education Services recorded completely and accurately in the servicer’s loan servicing systems - and as of June 30, 2005, ACS Education Services had effective internal control over compliance with requirements to record completely and accurately in the servicer’s loan servicing systems - all applicable LaRS loan data for loans transferred, including beginning balances.

•                                          Upon receipt of Student Status Confirmation Reports or other notification of change information for loans serviced during the year ended June 30, 2005, ACS Education Services accurately updated -and as of June 30, 2005, ACS Education Services had effective internal control over compliance with requirements to accurately update - loan records for changes to student status, including conversion to repayment status in accordance with 34 CFR 682.401 (b)(20) and 34 CFR 682.209, respectively.

•                                          For loans serviced during the year ended June 30, 2005, ACS Education Services:  (a) calculated and as of June 30, 2005, ACS Education Services had effective internal control over compliance with requirements to calculate - interest and principal in accordance with 34 CFR 682.304 and (b) applied and as of June 30, 2005, ACS Education Services had effective internal control over compliance with requirements to apply (i) loan payments effective with the day of receipt and (ii) prepayments in accordance with 34 CFR 682.209 or the documented specific request of the borrower.

•                                          For loans serviced during the year ended June 30, 2005, ACS Education Services complied with - and as of June 30, 2005, ACS Education Services had effective internal control over compliance with - the due diligence requirements for collection of delinquent loans, including the requirements for skip-tracing or pre-claims assistance set forth in 34 CFR 682.411 (c)-(m).

•                                          For loans serviced during the year ended June 30, 2005, ACS Education Services complied with - and as of June 30, 2005, ACS Education Services had effective internal control over compliance with - deadlines for timely filing of claims with the guaranty agency concerning death, disability, false certification, closed schools, or bankruptcy contained in 34 CFR 682.402(b), (c), (d), (e), (f) and (g)

 

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for default claims contained in 34 CFR 682.406(a)(5).  For loans serviced during the year ended June 30, 2005, ACS Education Services accurately categorized - and as of June 30, 2005, ACS Education Services had effective internal control over compliance with requirements for accurately categorizing -amounts pertaining to claims in LaRS.

•                                          For loans with timely-filing violations or due diligence violations that were cured during the year ended June 30, 2005, ACS Education Services documented that it performed - and, as of June 30, 2005, ACS Education Services had effective internal control over compliance with requirements to perform - cure procedures required by 34 CFR 682 Appendix D [Bulletin 88-G-138].  For loans on which a cure was required but that were not cured during the year ended June 30, 2005, ACS Education Services properly categorized - and, as of June 30, 2005, ACS Education Services had effective internal control over compliance with the requirements to properly categorize the loans in LaRS prepared and submitted to ED on behalf of our lender clients or the billing information prepared by ACS Education Services and submitted to our lender clients.

Very Truly Yours,

/s/ Meliss Hankin

 

Meliss Hankin

Senior Vice President

ACS Education Services

Affiliated Computer Services, Inc.

Education Services, GLS Division

 

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For three of the Prior Period Interest Benefit errors, the effect was less than two dollars.  For the fourth Prior Period Interest Benefit error, the error resulted in an under reporting of $92.61.  The resulting effect of the errors on the Interest Benefit amount reported in the LaRS was not material.

Recommendation:

We recommend that ACS Education Services strengthen their quality assurance review related to prior period Interest Benefit and Special Allowance manual adjustments to system records.

Management’s Response:

We will share this finding with our quality assurance staff so that they can ensure that they are focusing on these types of manual processing errors.  We will also assess whether our statistical sample size needs to be expanded in this particular area.

Finding No.  2

Special Allowance Current Quarter

Criteria:

§682.302 Payment of special allowance on FFEL loans.

(c) Rate.  (1) Except as provided in paragraph (c)(2) of this section, the special allowance rate for an eligible loan during a 3-month period is calculated by—

(i)                                  Determining the average of the bond equivalent rates of the 91-day Treasury bills auctioned during the 3-month period;

(ii)                              Subtracting the applicable interest rate for that loan;

(iii)                          Adding—(A)(l) 2.8 percent to the resulting percentage for a Federal Stafford loan for which the first disbursement is made on or after July 1, 1998; or (2) 2.2 percent to the resulting percentage for a Federal Stafford loan for which the first disbursement is made on or after July 1, 1998 during the borrower’s in-school, grace, and authorized period of deferment.

Statement of Condition:

We noted that one loan from Lender ID #833471 was placed in an incorrect Special Allowance category for 16 days during our review of Special Allowances.

Cause:

The Special Allowance category of the one loan was incorrectly updated when a deferment was manually processed on January 17, 2005.  Since the deferment was retroactive to July 14, 2004, the loan should have been placed in the Special Allowance category of CA (Stafford Loans disbursed after January 1, 2000 while in school, grace, or deferment) for the entire quarter.  Instead the loan was only placed in the Special Allowance category of CA starting from January 17, 2005.  The first 16 days of the quarter remained in the Special Allowance category of CB (Stafford loans disbursed after January 1, 2000 while in a status other than in-school, grace, or deferment).

 

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Effect:

The difference between the Special Allowance rates for CA and CB is 0.6% which resulted in the loan being charged Special Allowance at a rate 0.6% higher for 16 days.  The effect of the error was not material.

Recommendation:

We recommend that ACS Education Services strengthen their quality assurance review related to manual adjustments to system records.

Management’s Response:

We will share this finding with our quality assurance staff so that they can ensure that they are focusing on these types of manual processing errors.  We will also assess whether our statistical sample size needs to be expanded in this particular area.

Finding No. 3

Student Status Changes

Criteria:

§682.411 Basic Program Agreement

(b)                               Terms of agreement

(20)                        Monitoring student enrollment.  The guaranty agency shall monitor the enrollment status of a FFEL program borrower or student on whose behalf a parent has borrowed that includes, at a minimum, reporting to the current holder of the loan within 60 days any change in the student’s enrollment status reported that triggers—

(i)           The beginning of the borrower’s grace period; or

(ii)          The beginning or resumption of the borrower’s immediate obligation to make scheduled payments.

Statement of Condition:

We noted that one loan from Lender ID #819873 had a notice of a new graduation date was not updated to the system records.

Cause:

For one borrower, a notice was received from the Guarantor to change the graduation date from August 27, 2004 to August 24, 2003.  ACS Education Services noted that this new date could be incorrect because a disbursement was made July 30, 2004, which would indicate the borrower was still in school.  ACS Education Services sent a letter to the University to verify the graduation date.  The University sent a letter back to ACS Education Services reporting a graduation date of August 24, 2004.  The borrower’s records were not updated to reflect the graduation date from August 27, 2004 to August 24, 2004.

 

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 APPENDIX A
Background

The Higher Education Act of 1965 (HEA), as amended, requires each lender, as defined in Section 428(b)(l)(U) of the HEA, participating in the Federal Family Education Loan (FFEL) Program to obtain a compliance attestation of its FFEL Program.  These compliance attestations are performed in accordance with the AICPA’s Professional Standards for Attestation Engagements (SSAE) No. 10, Section 800, the general fieldwork and reporting standards in Government Auditing Standards, issued by the Comptroller General of the United States; and the Audit Guide, Compliance Audits (Attestation Engagements) for Lenders and Lender Servicers Participating in the Federal Family Education Loan Program (the Guide) issued by the US Department of Education, Office of Inspector General, dated December 1996.

Lenders using a third-party service organization(s) to service all or part of its FFEL Program loan portfolio may not be able to make all of the assertions required in Section II of the Audit Guide.  In those situations, the Department of Education will accept, as meeting the lender audit requirement, an independent accountants’ report based upon an “alternative or combined” engagement as defined in Section III of the Audit Guide.  The lender must obtain from the service organization an audit/attestation report that meets the requirements described in Section III of the Audit Guide.

The independent accountants’ report(s) must include their opinion with respect to the service organization’s compliance with the specified requirements in Section II of the Audit Guide pertaining to functions carried out by the servicing organization.

ACS Education Services is a for profit third-party student loan servicing organization responsible for the proper and timely performance of many aspects of student loan processing.  The primary services provided to the loan holders by ACS Education Services are:

•                                          accepting loan origination and disbursement information on new and existing borrowers;

•                                          processing of general borrower correspondence, forbearance and deferment requests and borrower  status changes;

•                                          receiving and tracking original, imaged or electronic loan documentation;

•                                          maintaining borrower demographic information while the student is in school, billing accrued interest to the appropriate parties, and combining multiple loans where appropriate;

•                                          processing borrower loans through the grace period, placing the loans into repayment and calculating monthly payment amounts; and,

•                                          applying loan payments, calculating delinquency periods, collection activities, claim processing on defaulted loans and cure procedures for defaulted loans rejected by the guarantor.

The functions described above provide a basis for ACS Education Services to prepare information for the quarterly Lender Reporting System (LaRS) filings.

The lender ID’s covered by this report are included in Appendix B.

 

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