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Cohort Default RatesBehind the Numbers
An old problem and new issues
The leading contributor to defaults
Final Enrollment Code - Defaults2%
16%
1%
4%
73%
4%
Full-time
Graduated
Half-time
Less than half-time
Withdrawn
Other
Total Disbursed $1-$5000
Status of Defaulters
Status of Defaulted Loans by Sector
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
APC Private 2 Year Private 4 Year PublicVocational
ProprietaryVocational
SUNYCommunity
College
SUNY 4 Year
% of Defaulted Loans
Se
cto
r
Other
In-School
Graduate
Withdrawn
Servicing the “old” way
Lender involved
The “one lender rule”
Multiple players working on the same account, Lender, GA, Servicer
New Challenges to Manage Defaults
Dual Programs Three year Cohort Formula DL Servicing transition from ACS Four New Servicers Multiple new non profit Servicers “Put” Loans Gainful Employment Risk Management
Dual Programs
What is the impact of a student borrowing a Direct Loan and a FFEL Loan?
Split Servicing
Private Sector Title IV Additional Servicers (TIVAS)
Where a borrower has a DL (ACS) and a FFEL loan, Ed will make an effort to move both loans to the TIVAS.
The Three Year CDR
Old Calculation:
Borrowers who entered repayment and defaulted during a two year period
Borrowers who entered repayment during the cohort year
For example: Two year 2010 CDR 10/1/09 – 9/30/11
10/1/08 – 9/30/09
New Calculation:
Borrowers who entered repayment and defaulted during a three year period
Borrowers who entered repayment during the cohort year
For example: Three year 2010 CDR 10/1/09 – 9/30/12
10/1/08 – 9/30/09
Puts
May 7, 2008, the Ensuring Continued Access to Student Loans Act (ECASLA) was signed into law, thus creating the PUT Program
Deadline extended to October 15 2010
HESC Loans to be put from 7/09 – 6/30/10
409,603 loans will be put
SLMA, Citibank, Wells Fargo, Nelnet
What happens to Puts
Title Four Additional Servicers (TIVAS)
Great Lakes, PHEAA, Nelnet, and Sallie Mae
Non Profit Servicers
Many additional Non –Profits
100,000 Accounts
Fisma Compliant
Current Challenges To Managing Defaults
Establishing contact with a borrower
Focus on the borrowers that need assistance
Managing multiple servicer relationships
Maintain contact over a three year period
Converting the borrower to active repayment
Moving to a deferred status?
Conversion to Repayment
Early Outreach to Withdrawn Students
Develop a long term strategy of borrower contact
Countdown E-mails During Grace
Encourage Response E-mail
Exit Counseling
Information on repayment plans
Info on Income –Based Repayment (IBR)
Info on changing repayment plans
Loan forgiveness provisions
Forbearance provisions
Consequences of default
Consolidation Loans, tax benefits
New Exit Counseling
Limit the confusion
Show them how to find their servicer
Don’t provide too many options
Direct them to one number