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Delinquency and Default Prevention Initiatives

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					   Delinquency and Default
    Prevention Initiatives
          Jim Flippin, VP Student Loan Division
                              R&B Solutions
            Nadia Keyes, VP Customer Service
                         Edfinancial Services
       Bobbi Pulley, Director Borrower Services
             Iowa College Student Aid Commission
        Tim Cameron, Meteor Project Manager
   National Council of Higher Education Loan Programs

NCHELP 2010 Debt Management Conference
March 21-24 · Nashville, TN                             1
             Financial Literacy
                       Dr. Jim Flippin
                      Vice-President
                   Student Loan Division
                      R&B Solutions




NCHELP 2010 Debt Management Conference
March 21-24 · Nashville, TN                2
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.”




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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.

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    March 21-24 · Nashville, TN                     4
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.


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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.

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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.




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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.



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Strategies for Successful Financial
Education
• Develop classroom curriculum on financial
  education and economic courses.
• Create a partnership with organizations to
  bolster financial health awareness.




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Financial Literacy and Education
Summit
  Theme: “Advancing Financial Stability and
    Responsibility”
  Monday, April 19, 2010
  9:00 a.m. to 11:00 a.m. (CST)
  Federal Reserve Bank of Chicago
  230 S La Salle Street
  Chicago, IL 60604
  To register:
   www.practicalmoneyskills.com/summit2010

   NCHELP 2010 Debt Management Conference
   March 21-24 · Nashville, TN                10
Successful Debt Management:
      Three Key Notes
                        Nadia Keyes
        Vice President of Customer Care
              Edfinancial Services




 NCHELP 2010 Debt Management Conference
 March 21-24 · Nashville, TN              11
NCHELP 2010 Debt Management Conference
March 21-24 · Nashville, TN              12
                              Outbound Efforts

       Quantity of Calls, Emails, Letters, etc

                                 Strategies

                 Right Party Connect Rate

                          Quality Interactions

           Close Rate                   Quality Monitoring


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Outbound Efforts
 • Timeline for outbound efforts
 • Early intervention through late stage
   delinquency
 • Many methods of delivery
 • Creative correspondence
 • Ability to adapt quickly


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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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    March 21-24 · Nashville, TN                       16
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 Pulley
       Director, Borrower Services
  Iowa College Student Aid Commission




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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)




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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.
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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.



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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



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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
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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




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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.




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




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Student Assistant Grants
 • 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
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Student Assistant Grants
• 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



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Student Assistant Grants
• 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




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Helping Schools & Borrowers Cope
       with Split Servicing

                         Tim Cameron
            Meteor Project Manager
      National Council of Higher Education
              Loan Programs, Inc.


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   March 21-24 · Nashville, TN               33
Growth of Split Servicing
 • “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
Split Servicing – School Examples

 • 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)
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, and
        FAMS vendors
   • Primary focus:
        Loan tracking
        Debt 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 Documentation
   www.NCHELP.org/Meteor.htm
    – Implementation Information
    – Current Provider List
    – User Guide and other documentation
Contact Information

• Tim Cameron
  Meteor Project Manager
  Office: (954) 565-7229
  Cell: (954) 295-0949
  meteor@nchelp.org

				
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