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Delinquency and Default Prevention Initiatives

Jim Flippin, VP Student Loan DivisionR&B Solutions

Nadia Keyes, VP Customer ServiceEdfinancial Services

Bobbi Pulley, Director Borrower ServicesIowa College Student Aid Commission

Tim Cameron, Meteor Project ManagerNational Council of Higher Education Loan Programs

March 21-24 · Nashville, TN 1NCHELP 2010 Debt Management Conference

Financial Literacy

Dr. Jim FlippinVice-President

Student Loan DivisionR&B Solutions


President’s Advisory Council on Financial Literacy 2008

“On January 22, 2008, President George W. Bush signed an executive order creating, for the first time, a President’s Advisory Council on Financial Literacy. Charles R. Schwab was the first Chairman.”


Why Financial Literacy is Important?

• Financial Wellness plays a vital role to students’ success.

• According to the National Center for Education Statistics (NCES), the research arm of the U.S. Department of Education, students who dropped out of postsecondary institutions cited financial reason as the primary catalyst for leaving school.


Financial Literacy Statistics (by Schools, Corporations, etc.)

• Thirty-eight states reported personal finance standards in 2004, up from 31 states in 2002.

• Seven states, up from four in 2002, made personal finance a requirement for high school graduation in 2004. Nine states require testing in personal finance.


Statistical Information

• Jump Start: 2008 survey to college students about financial concepts. Only 62% answered questions correctly, scores did increase from 59% with freshmen to 65% for seniors.

• University of Northern Texas: developing a new tracking system to better understand the impact of their financial literacy efforts.


Statistical Information

• University of Hawaii: Need assessment of control group found that 13 of 20 indicators in favor of those who participated in financial literacy workshops compared to those who did not.


Strategies for Successful Financial Education

• Develop programs that provide opportunities for people to become informed consumers and understand the financial products that are available to them.

• Provide seminars, printed materials, web-based information systems, video research.


Strategies for Successful Financial Education

• Develop classroom curriculum on financial education and economic courses.

• Create a partnership with organizations to bolster financial health awareness.


Financial Literacy and Education Summit

Theme: “Advancing Financial Stability and Responsibility”

Monday, April 19, 20109:00 a.m. to 11:00 a.m. (CST)Federal Reserve Bank of Chicago230 S La Salle StreetChicago, IL 60604To register: www.practicalmoneyskills.com/summit2010


Successful Debt Management:Three Key Notes

Nadia KeyesVice President of Customer Care

Edfinancial Services


Outbound Efforts

• Timeline for outbound efforts• Early intervention through late stage

delinquency• Many methods of delivery• Creative correspondence• Ability to adapt quickly

March 21-24 · Nashville, TNNCHELP 2010 Debt Management Conference

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Yellow Letter Campaign

• Initiated May 2009

• Sent at 283 days delinquent

•No less than the 17th piece of mail received from us since Day 1 of delinquency, yet the majority that respond say “I didn’t know I was in default”

• Over 880 borrowers and $11 Million saved from default to date

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Strategies

• Analysis, review, and strategic response• Each day the buckets are filled and filled in

different proportions, how do we empty the buckets?

• Combining knowledge of staff, capacity, technology, and borrower tendencies

• Reevaluating constantly to remove inefficiencies and learn from ineffective strategies


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Quality Interactions

• We’ve got them on the phone, now what? • Training representatives to respond to fit the

borrower’s specific needs without deviating from acceptable standards

• Listening to the commonalities among borrowers


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Most common borrower responses for delinquency in 2010

• Borrower is working but income has been reduced

• Borrower is employed but spouse is not employed

• Borrower is planning to go back to school because unable to find employment

• Borrower is working part time--unable to locate full time employment at this time


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Summary

• The goal in any default aversion program is to maximize both your opportunities as well as your ability to capitalize on those opportunities

• Maximum effectiveness comes from diligent efforts, combined with solid planning, and executed by quality staff


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Student Loan Default Prevention Tool Kit

Bobbi PulleyDirector, Borrower Services

Iowa College Student Aid Commission


Borrower Debt Management Service

• Tool that helps borrowers stay on top of their student loan obligations.– The statements provide students with detailed

information about all of their federal loans (sweeps NSLDS)


Borrower Debt Management Service

• Schools can request statement based on:– Anticipated graduation date– Withdrawal date– In-school status– Grade Level– SSN– Name

• The school may also receive a roster of students to track loan indebtedness.


Borrower Referral Program

• Enables schools to proactively refer borrowers who may be at risk of default to Iowa College Aid for additional assistance.

• The Program is designed to educate and counsel individual borrowers about their obligations while they are in school, during their grace period or after they have left campus.


Borrower Referral Program

• Using a secure website, the school provides borrower detail and specifies the reason for the referral as:– Excessive debt level based on the school’s

determination– Satisfactory Academic Progress (SAP) concern– Student has withdrawn– Other reason, specified in the comment section


Delinquent Borrower by School Report• Helps schools identify and work with

delinquent loan borrowers.• The data is updated monthly, can be

downloaded in Excel and can be sorted by a variety of characteristics including:– Borrower name– Borrower social security number– Borrower address and phone number– Student information (for PLUS loans)– Number of days delinquent


Delinquent Borrower by School Report

• The data is updated monthly, can be downloaded in Excel and can be sorted by a variety of characteristics including:– Dollar amount delinquent– Repayment start date– Lender contact information– Estimated cohort default year


Delinquent Borrower by School Report

• The data can be merged into Word documents to help the school create more efficient customized communication campaigns to target various groups of delinquent borrowers.


Student Assistant Grants

• Provides grant funds for the creation of student assistant positions that provide a peer-to-peer campus connection.



• Program support is provided by Iowa College Aid including:– Advertising and interviewing assistance– Training– Monthly conference calls– Webinar training– Newsletter– Group list-serve– Assistant website– Campus visits with assistants– Attend events hosted by assistants



• Assistant responsibilities include:– Primarily work on default prevention and financial

literacy projects– Conduct three core default prevention programs

per semester (i.e. lunch and learn seminars, residence hall programs, class presentations, etc.)

– Project progress must be reported to Iowa College Aid monthly



• Assistant responsibilities include:– Participate in, at minimum, 4 monthly

conference calls or Webinar trainings– Communicate among the assistant group to

share project ideas, progress and feedback


Helping Schools & Borrowers Cope with Split Servicing

Tim CameronMeteor Project Manager

National Council of Higher Education Loan Programs, Inc.


• “Split Borrowers”• Students with loans serviced at multiple loan servicers

• FFELP• Put Loans• Direct Loans• Alternative Loans

• Historically, these students have more difficulty in successfully repaying their debt

Growth of Split Servicing

• The School Dilemma• Multiple Federal servicers• Existing $500 billion in outstanding FFELP loans• Alternative loan servicers• Even if their students have a SINGLE servicer, the school

will still need to interact with multiple organizations within each loan program• Multiple user ID’s and passwords• Non-aggregated information• Different display formats and navigation

Growth of Split Servicing

• Historically FFELP school that recently converted to DL• Must maintain relationships/user id’s with:

• Prior FFELP servicers• Alternative Loan servicers• Title IV additional servicers (TIVAS)• Current DL servicers

Split Servicing – School Examples

• Historically DL school• Must maintain relationships/user id’s with:

• Alternative Loan servicers• Title IV additional servicers (TIVAS)• Current DL servicer(s)

Split Servicing – School Examples

The Meteor Solution

• Non-proprietary, open source software • Real-time access to data• Aggregated information from multiple

databases• Technology solution to enhance your current

web services

Top Categories Where Borrowers Encounter Difficulty

• Account Balances• Repayment Plans & Amounts• Loan Cancellation• Default• Deferment & Forbearance

Data Overview

• Detailed listing of loans– Loan status– Original and current award amounts– Summarized repayment information by servicer– Repayment plan type– Interest Rate– Next payment due– Detailed payment, deferment and forbearance history– DAR, Claim and Default information– Contact information and custom message capabilities

• The Consolidated View

Access to the Network

• Standard Implementation– 11 Independent points of access to the Network

• Campus Based Authentication Model– Over 100 Schools

• Several customized implementations

Loan Volume

• Standard AP Implementation– 90% FFELP Loan Guarantees

• Real Time Detailed Data– Approximately 62% of outstanding guarantees

• LoanLocator Information– Approximately 28% of outstanding guarantees

– Alternative Loans• Real Time Detailed Data

– Approximately 64% of outstanding loans

Loan Volume

• Campus Based Authentication Model– 100% FFELP Loan Guarantees

• Real Time Detailed Data– Approximately 62% of outstanding guarantees

• LoanLocator Information– Approximately 38% of outstanding guarantees

– Alternative Loans• Real Time Detailed Data

– Approximately 64% of outstanding loans

– 100% Direct Loans• LoanLocator Information Only

The Campus Based Authentication (CBA) Model

Other Custom Implementations

• Currently working with:Lenders, schools, servicers, andFAMS vendors

• Primary focus:Loan trackingDebt Management

• Extensions of the CBA Process

For More Information….• Interactive Web Site Launched

www.MeteorNetwork.org – Audio presentation– Interactive demonstration version of the

software– Link to the Meteor project site

• Project Documentationwww.NCHELP.org/Meteor.htm – Implementation Information– Current Provider List– User Guide and other documentation

http://www.meteornetwork.org/

http://www.nchelp.org/Meteor.htm

• Tim CameronMeteor Project ManagerOffice: (954) 565-7229Cell: (954) [email protected]

Contact Information

mailto:[email protected]

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