Default Prevention Task Force

Report
Why is Default Management Everybody’s
Business and Why a Plan?
In This Session
Section 1: Regulations
Section 2: Default Management Task Force
Section 3: Identifying Default
Section 4: NSLDS Reports
Section 5: Developing a Plan
Section 6: Federal Loan Servicers
Section 7: Resources
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SECTION 1
Regulations
3
Regulations
34 CFR §668.14(b)(15)
Schools participating for the first time or that have undergone a change in
ownership that resulted in a change of control are required to use a default
prevention and management plan to participate in Title IV programs.
34 CFR §668.217
Institutions that have a 3-Year Cohort Default Rate of 30 percent or greater
for any one federal fiscal year is required to establish a Default Prevention
Task Force to reduce defaults and prevent the loss of institutional eligibility.
4
ED Recommendation
The Department recommends that every school
implement a default prevention and management plan
consistent with §668.217 to:
• Promote student and school success;
• Achieve low CDR; and
• Save students from the consequences of default.
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SECTION 2
The Default Management Task Force
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“Student Success” Approach
Focus is on helping borrowers to develop a healthy
relationship with their education (student success
solutions) and include:
• Increasing program completion rates;
• Decreasing program completion time; and
• Helping non-completers find a job.
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School-Based Default Prevention
1)
Form a Default Prevention Team, set measurable goals
and develop or adopt a default prevention plan.
2)
Organize a Default Prevention Task Force.
• The Default Prevention Task Force will drive your default
prevention process:
→
→
→
→
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Assess the resources you have available;
Team participants SHOULD be across campus;
Identify the purpose of the task force; and
Detail responsibilities of determining risk.
Default Prevention Task Force
Task Force members should include:
• Senior school official(s);
• Representatives from various offices (Enrollment
Management, Academics, Student Affairs, IT and
Institutional Advancement);
• Career Services; and
• Student representative (Student Government, PanHellenic Council).
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Activities for the Task Force
•
Study your student population.
→
Identify any common characteristics of your defaulters and non-defaults,
and borrowers and non-borrowers.
•
Build on Early Intervention strategies already in
existence.
•
Review all of your borrower education materials
•
Discuss your current strategies and determine what
works and what may need some improvement
CONTINUED
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Activities for the Task Force (cont.)
•
Work closely with your servicers.
•
Find out what type of services are available from your
servicers.
•
Fine-tune your Loan Servicing procedures for the
period while the borrower is at your school, in grace
and repayment.
•
Have clear and precise procedures with a timeline of
dates to take appropriate actions.
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Default Management Strategy
Organize Task Force
Organize a Default Prevention
Task Force
 Assess resources for team
 Identify members
 Set Purpose
 Detail Responsibility
Establish
Objectives
Outline Actions
Define and Identify Risk
 Determine who is defaulting
and why
 Analyze data
(optional for some
schools)
Submit Plan
FSA’s Default Prevention Team to assist
schools with:
 Establishing their default prevention
goals
 Developing, refining and reviewing
your default prevention plan.
Set Objectives:
 Establish Objectives
 Identify steps needed to
achieve goal
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Submit Plan
Define Default
Risk
Outline Actions
 Specify actions needed to
achieve your goal
 Ensure actions are
measureable
SECTION 3
Identifying Default:
Risks, Interventions, Strategies
and Using The Data
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Who are your Students?
•
•
•
•
•
•
•
•
•
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?% students received GED
?% first generation college students
?% receive financial aid
?% of Pell recipients have Zero EFC
?% students in a particular major
?% students place into developmental Math or English
?% are part-time students
?% retention Spring to Fall – ?% retention Fall to Fall
?% team sports players
Steps to Identify Default Risk
Conduct Risk Analysis:
• You will need data! And someone to work the data!
→ Academic data: Program completion rates; retention rates; and
data at the student level.
• Review combined NSLDS (default and delinquency) data and
school data about defaulters and non-defaulters.
• Servicer data
Use data to create a picture of borrowers at-risk of
default, e.g., who defaulted and why?
• ‘Who’ is not enough.
• ‘Why’ will require input of academic, student affairs and other
professionals.
→ Knowing ‘why’ is necessary to create targeted, useful and
measureable interventions.
15
DM Task Force Responsibility
The responsibility of your DM Task Force:
•
•
•
•
•
Determine the source of your default risk;
Determine what steps your school will take to reduce default risk;
Represent all parts of the institution (including management), which
will contribute to risk reduction activities;
Allocate school resources to default reduction activities; and
Assess the effectiveness of default reduction activities over time.
→ Are they working?
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Reducing DefaultRisk Interventions
Two ways to think about reducing default risk:
1)
Assisting borrowers by enhancing their knowledge of loan
responsibilities and processes and strengthening their relationship
with their loan servicer; and
2)
Assisting borrowers by enhancing educational and employment
outcomes.
Examples:
→
→
→
→
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Increase Student Success;
Reduce Program Completion Time;
Strengthen Relationship with Potential Employers; and
Career Placement for both Graduates and Non-Graduates.
Reducing DefaultRisk Strategic
Create interventions based upon your data:
Targeted vs. ‘best practices’ interventions;
• Most efforts are targeted at identified risk;
• Utilizing Intervention Opportunities;
• Utilizing ‘leverage’ where it exists; and
•
•
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Adding general best practices to targeted efforts.
Reducing Default RiskPlan Considerations
Specific Intervention Examples:
•
•
•
•
•
•
•
•
•
•
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Targeted Additional Loan Counseling;
Targeted Existing Students;
Success Efforts for At-Risk Borrowers;
Review Policies and Procedures;
Collect Detailed Contact Information;
Financial Literacy Training;
Tracking and Projections;
Early Stage Delinquency Assistance;
Late Stage Delinquency Assistance; and
Promoting Loan Rehab for Defaulters.
Food for Thought:Post College Risk Factors
•
•
•
•
Income
Highest Income Earned
Occupation
Indebtedness
→ Other More Important Loans to Pay
•
•
•
•
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Marital Status, basic skill needs
Number of Dependents
Filing for Unemployment Insurance
Dissatisfaction with Educational Program
SECTION 4
NSLDS Reports for Default and
Delinquency Prevention
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NSLDS Reports for Schools
Reports for Data Accuracy:
Date Entered Repayment Report;
• School Repayment Info Loan Detail;
• School Cohort Default Rate History; and
• Enrollment Reporting Summary.
•
Reports for Default Prevention:
•
•
•
•
•
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School Loan Portfolio Report;
Date Entered Repayment Report;
Borrower Default Summary;
Exit Counseling; and
Delinquent Borrower Report.
NSLDS Reports
School Loan Portfolio (SCHPR1)
• The School Portfolio Report provides details on borrowers and
loans in your current loan portfolio.
• The report is based on loan repayment begin date.
• If your school has merged, previous school codes are included in
the report.
• Report is available in Extract only.
Delinquent Borrower Data (DELQ01)
•
•
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Use the Delinquent Borrower Report (DELQ01) to assist with
default prevention.
Use Web Page under Aid tab “Delinquent Borrowers” for current
up-to-date data.
SECTION 5
Developing a Default
Prevention Plan
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Involuntary DP Plan?
34 CFR §668.217
Cohort default rate regulation requires that schools which have a cohort
default rate equal to or greater than 30% must develop a default
prevention plan that requires identifying at-risk borrowers.
Default Prevention Plan
•
•
•
•
Success is achieved when solid plans are developed and executed;
A plan pulls together people and resources toward a common goal;
The plan provides for consistency;
ED Default Management sample plan in Dear Colleague Letter GEN05-14 issued September 2005 (Revised Plan out soon); and
• Revise and adjust you plan as needed to maximize your success.
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Administrative Concerns
•
What did your FY 09 and FY 10 rates look like and what
will your FY 11 CDR look like?
→ If you have not looked at your rates, are you likely to hit 30% in
September 2014?
•
Who are members of or a part of your DP team?
•
What are the sources of your default risk?
•
What ‘traditional’ strategies are included in your DP plan?
CONTINUED
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Administrative Concerns (cont.)
•
Have you leveraged knowledge about default risk?
•
What ‘student success-focused’ strategies are included in
your DP plan? Have you leveraged knowledge about
your default risk?
•
Are your strategies measureable? How will you know if
you are succeeding?
•
Is your plan 34 CFR §668.217 compliant?
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SECTION 6
Federal Loan Servicers
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Federal Loan Servicers
Federal Loan Servicers:
29
•
Educate and inform borrowers regarding the tools and options
available to assist in the management of their student loans;
•
Offer multiple repayment options tailored to borrower preferences
(i.e. online payments, ACH, check, etc.);
•
Provide self-service tools for borrowers and options to receive bills
and/or correspondence electronically;
•
Offer dedicated services to schools to help manage cohort default
rates; and
•
Comply with legislative regulatory requirements and provide unique
services.
Servicer Repayment Counseling
During the grace period a loan servicer:
30
•
Establishes a relationship with the borrower;
•
Ensures the correct repayment status;
•
Discusses the appropriate repayment plan;
•
Promotes self-service through the web;
•
Updates and enhances borrower contact information; and
•
Discusses consolidation options.
Communication Channels for Borrowers
•
•
All servicers have toll free numbers for borrowers to
contact (phone, fax, and e-mail).
All servicers use IVR (integrated voice response) systems.
→ Allow self service-for those that prefer
→ Make payments over the phone
•
All servicers includes option to speak to a representative.
•
All servicers have a dedicated staff to assist borrowers.
•
All servicers offer financial literacy (budgeting, credit tips,
etc.).
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Servicer Tools for Borrowers
Websites designed to assist the borrower:
•
Understand the various repayment plans and options;
and
•
Understanding Options (examples).
→ Deferments
→ Forbearances
→ Discharges
→ Forgiveness Programs
→ Loan Consolidation
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SchoolServicer Partnership
All servicers work to gather feedback and opinions from
schools and find ways to partner with schools on default
prevention, via:
• Face to face meeting on school campuses;
• Financial aid conference attendance;
• Presentations at conferences;
• Proactive phone calls; and
• E-mail communications.
Partner with the servicers!
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SECTION 7
Resources
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Financial Awareness Counseling
Financial Awareness Counseling on StudentLoans.gov was
developed to:
• Provide a centralized, online source of financial literacy information
for students;
• Assist borrowers in making informed postsecondary funding
decisions;
• Provide schools with educational resources about federal student
aid; and
• Support the government-wide efforts to improve financial capability
in the U.S. through the Financial Literacy Education Commission.
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FAC: StudentLoans.gov for 2013-2014
StudentLoans.gov has brought ALL FSA loan counseling
tools together on one website:
• Entrance Counseling;
→ Subsidized & Unsubsidized and GradPLUS
• Exit Counseling; and
→ NSLDS will continue to provide detailed Exit Counseling reports
and you’ll continue to obtain demographic and reference
information from that website as you do today
• Financial Awareness Counseling.
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FAC: StudentLoans.gov for 2013-2014
New features for signed-in students:
• New landing page with guidance to help the student select the
right type of counseling;
• Select schools to notify from a list of associated schools;
• Add new schools to notify;
• Select preferred repayment plan in Exit Counseling; and
• Send notifications of previously completed counseling sessions.
→ Entrance Counseling
→ Financial Awareness Counseling
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FAC: StudentLoans.gov for 2013-2014
StudentLoans.gov has added a new Repayment Estimator
to the website.
•
The repayment estimator is on the “My Preferences” screen
•
An authenticated users will see loan data from NSLDS, eligibility of
each loan for a particular repayment plan, and estimate the payment
for a particular plan based on several factors including:
→
→
→
→
→
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Loan type;
Loan balance;
Income;
Family size; and
Where you live.
FAC: StudentLoans.gov for 2013-2014
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FAC: StudentLoans.gov for 2013-2014
New entrance and exit counseling response functionality
on ‘Options’ screen in COD.
Entrance Counseling
•
•
Participation
Response frequency
(Daily or On-Demand)
Exit & Financial
Awareness Counseling
•
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Response frequency
(Daily or On-Demand)
Cohort Default Rate Guide
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Web Links
Cohort Default Rate
• The Cohort Default Rate Guide
→ http://www.ifap.ed.gov/drmaterials/finalcdrg.html
Delinquency and Default Management
• Electronic Announcement – Delinquency Prevention Activities
→ http://www.ifap.ed.gov/eannouncements/060310LoanServicingyInfoDelinqPrevent
Act.html
General Servicing Information
• Electronic Announcement (EA) – Loan Servicing Information
→ http://www.ifap.ed.gov/eannouncements/032610LoanServicingInfoFedOwn.html
Assessments
• FSA Assessments
→ http://ifap.ed.gov/qamodule/DefaultManagement/DefaultManagement.html
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Additional Resource
Operations Performance Management Service Group
CDR calculations and data challenges
Main Line: 202-377-4258
Hotline: 202-377-4259
Email: http:[email protected]
Web: http://ifap.ed.gov/DefaultManagement/DefaultManagement.html
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Financial Literacy Resources
Lenders and Guarantors
• Counseling Resources
Jump$tart Coalition For Personal Financial Literacy
•
http://www.jumpstart.org/
FDIC Financial Education Literacy
•
http://www.fdic.gov/consumers/consumer/moneysmart/index.html
Mapping Your Future
•
http://www.mapping-your-future.org
National Endowment for Financial Education
•
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http://www.nefe.org/tabid/183/default.aspx
IF WE DON’T MANAGE HIGH DEFAULT RATES
WHAT DOES THE FUTURE HOLD FOR OUR STUDENTS?
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3 Take-a-ways from this Session
1)
Working with the New Default Prevention Team
2)
Identifying Default Risks
3)
Default Prevention Plans
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FSA Contact Information
Larry Eadie
[email protected]
ET Winzer
[email protected]
We appreciate your feedback and comments!
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