ILASFAA Leaves of Change: Harvesting New Ideas 20152015 A Road to CDR Reduction: Traveling to Lower Rates

ILASFAA Leaves of Change: Harvesting New Ideas

2015

A Road to CDR Reduction: Traveling to Lower Rates


2015

Cohort default rates have decreased

FY 2011 OfficialCohort Default Rate

13.7%

FY 2012 OfficialCohort Default Rate

11.7%8


2015

610,956 borrowers defaulted during the FY 2012 cohort period


2015

As of July, 6.9 million Americans with student loans hadn’t sent a payment to the government in at least 360 days.

Wall Street Journal, 2015


2015

Whether your cohort default rate increases or decreases, default management is

a necessity to ensure all student loan borrowers are successful in repayment and avoid the negative consequences

of delinquency and default.


2015

Look Beyond the Percentages

289 Default in

2011

301 Default in

2012

240 Default in

20137.1%

Cohort Default

Rate11,600 borrowers who entered

repayment in 2011

830

11,600

Fabulous University has a 7.1% CDR


2015


322 Default in

2011

285 Default in

2012

223 Default in

201313.6%Cohort Default

Rate6,100borrowers who entered

repayment in 2011

830

6,100

Marvelous University has a 13.5% CDR


2015


Fabulous

University

Marvelous

University

Number of borrowers in

default:830 830

Number of borrowers in

repayment:11,600 6,100

Default rate: 7.1% 13.6%


2015

AgendaKnowing where you’re headedTracking where your rates are trending

Picking your destinationIdentifying your target borrowers

1

Packing the right resourcesConducting outreach

2

3

Using GPS toolsLocating unknown borrowers4Utilizing trip advisorsUsing resources5


2015

TRACKING WHERE YOUR RATES ARE TRENDING


2015

Draft Rates

• Do not wait until you receive your draft rates to begin thinking about default prevention

• Track your rate throughout the year– Monthly– Quarterly


2015

CDR Timing

• FY2012 cohort period – Borrowers entered repayment

between 10/1/11 and 9/30/12 and defaulted between 10/1/11 and 9/30/14

• FY2013 cohort period– Borrowers entered repayment

between 10/1/12 and 9/30/13 and default between 10/1/12 and 9/30/15

• FY2014 cohort period– Borrowers entered

repayment between 10/1/13 and 9/30/14 and default between 10/1/13 and 9/30/16

• FY2015 cohort period– Borrowers entered

repayment between 10/1/14 and 9/30/15 and default between 10/1/14 and 9/30/17


2015

Which Cohort Period(s) Should You Track?

FY2012

FY2013

FY2014

FY2015


2015

What to Track

• Data needed – Number of borrowers already in default– Number of borrowers 240 up to 270 days

delinquent– Number of borrowers in repayment


2015

Step 1 – How to Track

19 borrowers defaulted in 2014, 2015,

20166.5%

Current

Cohort Default

Rate

289 borrowers entered repayment in 2014

19

289

2014 CDR


2015

Step 2 – How to Track

19 defaulted borrowers + 34 borrowers (240 or more days

delinquent) in 2014, 2015, and 2016

18.3%Project

edCohort Default

Rate

289 borrowers entered repayment in 2014

53

289

2014 CDR


2015

Save Your Borrowers

• Once you determine how many borrowers in your cohort could impact your CDR, try to save them

• Utilize delinquency reports to obtain borrower demographic data– NSLDS DELQ01 report– Loan servicer reports


2015

IDENTIFYING YOUR TARGET BORROWERS


2015

Types of Targeting

• Proactive targeting– Withdrawals– Graduating– In-grace

• At-risk targeting– Non-completion– Incurring high

balances– Defaulting


2015

Conduct a Defaulted Borrower Analysis

• Enables you to develop specific strategies to help students avoid default

• Allows you to correct ineffective practices throughout your institution

• Enables you to identify high risk students• Helps you to analyze the relationship between

loan default and student success


2015

Who’s Most Likely to Default

• Late registrant• Transfers/reverse

transfers• Not meeting

satisfactory academic progress

• Low GPA

• Withdrawals• Required to take

development classes• First-time students• Received GED• Excessive debt


2015

Why Are They Defaulting

• Understand the “why”– Financial issues– Relationship issues– Dependent care– Transportation– Health issues– Poor study habits– No campus connection


2015

Why Are They Defaulting

• Understand the “why”– Lack of employment

opportunities?– Multiple loans—confusion?– Excessive financial

obligations?– Lack of family support?


2015

Analyze Your Defaulted Borrowers

• Obtain a Loan Record Detail Report (LRDR) – The report is available as a preformatted

report or as a data file extract– NSLDS refers to the LRDR extract as the

SCHDREOP file• Query your own internal system to obtain

specific demographic data for the defaulted borrowers on your LRDR extract


2015

CONDUCT OUTREACH


2015

Purpose of Outreach

• Provide services to populations who might not otherwise have access to those services

• Fill in the gap in the services provided by the mainstream


2015

Purpose of Default Prevention Outreach

• Provide services (repayment assistance)to populations (borrowers) who might not otherwise have access to those services

• Fill in the gap in the services (repayment assistance) provided by the mainstream (loan servicers)


2015

Phases of Outreach

• Determine the goal• Identify a specific demographic• Study their needs• Create a program to help them learn

or recover


2015

Phases of Default Prevention Outreach

• Determine the goal– Help 20 borrowers resolve their delinquency

• Identify a specific demographic– Late-stage delinquent borrowers

• Study their needs– Resolve delinquency before they default

• Create a program to help them learn or recover– Make calls and connect them with their servicer

EXAMPLE


2015

Email Outreach

• When sending emails: – Utilize school’s email address– Use creative subject line to get

the borrower’s attention – Keep it precise, yet informative– Avoid including personally

identifiable information


2015

Letter Outreach

• When sending letters:– Highlight what you want them to know most in

bold or color– Encourage them to contact their servicer if they

have questions– Sign by hand


2015

Letter Outreach

• Hand write envelopes• Use stamps• Get creative with the envelopes

– Colors– Special messages (i.e. “Savings Inside”)– Stickers

Get Them to Open the Letter


2015

Phone Outreach

• When making calls:– Let borrowers know there are options available to

help manage their student loan debt/resolve delinquency

– Connect them to their servicer


2015

Phone Outreach

• When making calls:– Use a pleasant tone– Use voice volume control– Listen– Stay calm– Don’t take comments personally– Show empathy– Thank them…regardless of outcome


2015

LOCATING UNKNOWNBORROWERS


2015

Locating Borrowers

• Many borrowers who are difficult to find– Left school without completing– Have neglected their loan payment

obligation– Are avoiding other creditors– Move and change telephone numbers

frequently– Are confused– Fear the problem is too deep to find a way out


2015

Locating Borrowers

1. Review reports for unknown contact information– NSLDS Delinquency Borrower Report (DELQ01)– Loan servicers’ reports

2. Utilize internal and external resources to locate delinquent borrowers

3. Update contact information to federal servicers


2015

Locating Borrowers

• Yahoo People Search• Google• Whitepages.com• Voter registration records• Property tax assessor• Military locator• Professional licensing

records

• Alumni sites• Federal and state

prison locators


2015

Social Media

• Social media can be used to gather information to help locate a borrower– Date of birth– City– Place of employment– Married or changed name


2015

Social Media

• Facebook• MySpace• Twitter• Foursquare• Flickr• LinkedIn• Instagram


2015

Free vs. Fee-based Default Management Resources


2015

Pros and Cons of Free ToolsPros• Free• Flexibility• Students may respond

to school rather than outside vendor

Cons• Requires more time

and/or people• May need to use

multiple tools • Training required• Salary expense • Employee turnover


2015

Pros and Cons of Fee-based ToolsPros• Proven-strategies and

results• More resources• Expanded availability

Cons• Cost• Fee structure may be

complex• Limited to one company• Lack of transparency


2015

Benefits of Having a Default Prevention

Action Plan


2015

Why Have a Plan?• Provides you with a roadmap of

activities that you can implement

• Shows your institution’s commitment to default prevention

• Helps to garner across-the-institution buy-in

• Ensures default prevention goals are met

• Helps justify additional resources

• Strongly encouraged by the Department of Education (GEN-05-14


2015

USING FREE RESOURCES


2015

Resources

• Cohort Default Rate Guide– http://ifap.ed.gov/

DefaultManagement/ CDRGuideMaster.html


2015

Resources

• NLSDS ReportsDRC015DRC016

Repayment Loan Info Detail Report provides the current repayment statusof certain borrowers in the FFEL and Direct Loan programs who attended a school during a specific period, either 24 months (DRC015) or 36 months (DRC015)

DER001 The Date Entered Repayment Report is a list of student borrowers who are scheduled to go into repayment during a specific date range.

SCHDF2 The Borrower Default Summary Report provides a list of loans that currently have a default loan status and a loan status date that falls within the requested range

SCHPR1 The School Portfolio Report provides school users with information about all Direct or FFEL loans for a specified school.

DELQ01 The Delinquent Borrower Report provides school users a report of borrowers who have been reported as delinquent in making loan payments to oneof the federal loan servicers


2015

CONCLUSION


2015

Follow the Road to Reducing Rates

• Know where you stand throughout the year• Identify your at-risk borrowers• Conduct various types of outreach to ensure you

touch the borrowers that need your help most

• Help locate unknown borrowers

• Take advantage of free resources


2015

Thanks for Attending

Bill HendersonSenior Marketing Consultant

Great [email protected]

(877) 248-3961

mailto:[email protected]

Documents

ILASFAA Leaves of Change: Harvesting New Ideas 20152015 A Road to CDR Reduction: Traveling to Lower Rates