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Debt Management Practices Throughout the Borrower Lifecycle

Wanda StoverNorth Carolina State Education Assistance

Authority

Linda ViauVermont Student Assistance Corporation

Bill KohlNational Student Loan Program

Part IHistorical Perspective

Linda L. ViauAssociate DirectorVermont Student Assistance Corporation

Historical Perspective• for years, holders of student loans

focused their activities on effective default collection strategies

• over time, that focus has drastically changed to early intervention and default prevention

• Why the switch?– U.S. economic downturn– exacerbated by the events of September

11th

– tight job market– consumer credit crunch

Sequence of Events

• May 2001 - NCHELP’s Debt Management Committee developed a survey to determine some of the practices being utilized by the industry

• Summer of 2003 - the Debt Management Committee identified the need for additional information on industry practices

Sequence of Events (continued)

• intent was to identify “best practices” utilized within the industry (with measurements) and then share the results with its colleagues

• FSA at ED was working on a similar project

• Fall 2003 – Default Prevention Subcommittee of Debt Management Committee designs survey

Sequence of Events (continued)

• survey initially sent to Subcommittee members as a trial

• January 2004 - NCHELP Board approves the use of the survey

• March 2004 - survey was sent to all NCHELP members

• Summer and Fall of 2004 - results tabulated and follow up completed

Components of the Survey

• all NCHELP members invited to respond• privacy maintained• activities listed and detailed with an

indication of ‘where’ in the borrower lifecycle the activities would occur

• matrices were developed for eachNCHELP organization– guaranty agency– lender/holder– third party servicer

Types of Activities Included

• high school outreach• counseling• communication methods• financial planning• default prevention tools• training• research and development• technology• skip tracing

Borrower Life Cycles• outreach• in school• grace• repayment• delinquency

End Users• school• student• other organization

Part II

Examples of Survey Responses

• financial aid counselors and co-sponsored programs

• website• publications

Early Outreach Examples

• on-line calculator• on-line presentations• consumer credit counseling in

schools

In-School Examples

• web-based grace period information• early withdrawal counseling program • skip tracing

Grace Period Examples

• web-based repayment information

• default prevention workshops • on-line counseling

Repayment Examples

• counseling via telephone• claim aversion strategies• default management systems

Delinquency Examples

Part III

Examples of Initiatives Developed by Nebraska, North Carolina, and Vermont

Presented by Bill KohlVice President of OperationsNSLP

Money Management Counseling for students

Money Management Counseling• available at www.nslp.org• click on Loan Education Products

and then Money Management Counseling

• features free interactive tools students can use to manage money

• designed with input from financial aid professionals to meet student needs

Features interactive courses

Credit and Debtprovides information on budgeting, credit, and student loans

At the Bankhelps students understand how banks and bank accounts work

Home Financeteaches fundamentals of finding, renting and owning a home

Living within a budget

Budgeting Workshop includes…• worksheet to outline needs, wants,

expenses, and long-term goals• budget calculators to compare

income to expenses for:– current college students– recent graduates– full-time employees

Budgeting Workshop

Types of credit cards

Your credit history

At the Bank

Checking accounts

Keeping a checkbook

Balancing your checkbook

Choosing an account

Choosing an account

Home Finance

Renting 101

Why buy?

Refinancing

Take the quizeach course features an interactive quiz to help students review the course

Your credit rating

The value of things you own

Your FICO score

1. Your net worth is an assessment of:

Take the QuizPrint this quiz

disclosure statement

Credit statement

APR comparison chart

2. Credit cards are required to include a _________ in their promotional materials.

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Interactive Quiz

split APR

prime rate

sub-prime rates

3. If you have a bad credit score, you may be limited to loans with:

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Interactive Quiz

a person who borrows on credit

the individual or company who lends money on credit

the company that keeps a record of credit history

4. A creditor is:

Take the QuizPrint this quiz

Interactive Quiz

Completion certificate

Certificate of Achievement

This certifies that

has successfully completedNSLP’s course,

CREDIT AND DEBT

Congratulations!

• it’s free!• it’s easy!• visit www.nslp.org

– click on Loan Education Products and then Money Management Counseling

– the site will guide you through each course

Money Management Counseling

Questions?

Bill KohlVice President of OperationsP.O. Box 82507Lincoln, NE 68501-2507

phone800-735-8778, ext. [email protected] 402-479-6658 www.nslp.org

For more information…

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