Default Management New Challenges in Changing Times.

Default Management

New Challenges in Changing Times

To Be Covered

What’s Happening

New CDR Formula

Where did the PUTS put my loans

What can be done

Current Tools

Best Strategies

What’s Happening

Default rates are climbing across all sectors

What's Happening

“Informational” 3 year rates are being published

For public institutions in New York State the 2008 cohort two and three year cumulative rates :

Two year rate: 5522 Defaults/90780 in repayment CDR=6%

Three year rate: 10033 Defaults/90618 in repayment CDR=11%

What’s Happening

Students are struggling with multiple servicers

Colleges are finding that default management efforts need to be modified

New CDR Formula

Old Calculation: Borrowers who entered repayment and defaulted during a two year periodBorrowers who entered repayment during the cohort year

For example: Two year 2010 CDR 10/1/09 – 9/30/1110/1/09 – 9/30/10

New Calculation:Borrowers who entered repayment and defaulted during a three year periodBorrowers who entered repayment during the cohort year

For example: Three year 2010 CDR 10/1/09 – 9/30/1210/1/09 – 9/30/10

It is important to remember that the date a student enters repayment is generally six months after they leave school. Students who leave school in April 2009 will impact your 2010 CDR that will be published in 2012 and 2013.

New CDR Formula

Sanctions and benefits have changed as well

Raised the threshold percentage that triggers sanctions from 25% to 30%, effective in the 2012 FY

Single disbursement benefit threshold raised to 15 percent for three years

Where Have My Loans Been PUT?

PUT Loan program was authorized in ECASLA in 2008

Allowed for the purchase of eligible FFEL loans by the Department

HESC had over 400,000 loan transferred under the PUT program

Where Have My Loans Been PUT?

PUT loans create numerous problems for students and schools

Students may have several servicers because of PUT

Schools can no longer rely on GA for default management assistance on PUT loans

Also creates delinquency notification issues for schools

What can be done

New avenues of information gathering need to be developed

Student borrowers need to be made MORE aware of DM efforts

Need buy in from leadership (defaults are an institutional issue)

What about retention???

Current Tools

Current Tools

NSLDS Date Entered Repayment Report

Current Tools

Default Manager

Strategies

Realize that Default Management is a “contact” sport

Get as much upfront contact information as possible

Concentrate on withdrawals

Use electronic communication whenever possible

Strategies

Facebook page for former students with repayment questions

Palm Cards

Electronic copies of deferment / forbearance forms/IBR

Work with your Alumni Association

Questions?