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Private Loan Rehabilitation Programs Doug St. Peters – Sallie Mae Tom Glanfield – Boston Portfolio Advisors Larry Chiavaro – First Associates Loan Servicing, LLC
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Private Loan Rehabilitation Programs

Feb 25, 2016

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Private Loan Rehabilitation Programs. Doug St. Peters – Sallie Mae Tom Glanfield – Boston Portfolio Advisors Larry Chiavaro – First Associates Loan Servicing, LLC. Private Loans Overview. Total Student loan indebtedness made headlines this year as it approached $1 trillion - PowerPoint PPT Presentation
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Page 1: Private Loan Rehabilitation Programs

Private Loan Rehabilitation Programs

Doug St. Peters – Sallie MaeTom Glanfield – Boston

Portfolio AdvisorsLarry Chiavaro – First

Associates Loan Servicing, LLC

Page 2: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

2

Private Loans Overview• Total Student loan indebtedness made

headlines this year as it approached $1 trillion

• Source of funds for college– Awards – financial gov. support – scholarships– Savings– Parents/relatives– Loans

• Government• Private

Page 3: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

3

How a typical family pays for college

Student Borrowing; 18%

Parent Borrowing; 9%

Parent Income & Savings; 28%

Grants & scholarships; 29%

Relatives/friends; 4%

Student income & savings; 12%

Page 4: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

4

Private student – new loans• Growth has slowed: +2% last year (SLM)

• SLM New products – SMART Option– Pay while in school

• Shorten loan term• Save interest• Increase student connectivity• Borrower can choose and choices result in interest options

• Interest rate - Fixed rate private loans in market, competitive against non-subsidized government rates

Page 5: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

5

Private student loans underwriting

• Underwriting guidelines increase quality focus

• Co-borrowers• 64% of portfolio (+3% vs. prior year)• 94% of SMART Option

• Loan/School mix changing– Less for profit schools loans down -2% of

the mix last year

Page 6: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

6

Private loan - defaults• Protected form bankruptcy• Characteristics require different work

effort/strategy– Average balances are increasing– More co-borrowers 37% vs. 34% py– Pre-default more aggressive worked

• Settlement, repayment programs, less use of forbearance, pre-default pre-litigation talk offs

Page 7: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

7

Private LoansDefault profile Top 5 Reasons

• Overextended 44%• Unemployed 29%• Under employed 10%• Medical 7%• Unaware 4%

Page 8: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

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Private Loans Default Profile

• 46% withdrew from School• 40% graduated• 59% have a FICO score under 600• 9% never used forbearance vs. 21%

PY• 54% made between 25-60 months of

payments

Page 9: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

9

Private loansDefault collections

• Volume - monthly defaults are dropping - under $100MM in September

• Larger balances = less settlements

• More co-borrowers– Work both borrowers– More skip work– Co-borrower release programs

Page 10: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

10

Private loansDefault collections

• More collection programs– Settlement campaign– Reduced interest pay

• 0% interest• Report to Credit Bureau – paying as agreed

– Litigation (pre-default and post default)– Segmentation of inventory

• Contingency fee rate impact• Competition• Contests

• Collection agency – Collect it fast, Collect it right

Page 11: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

11

Private loans future• Demand • College costs more• Government not raising loan limits• Direct loans adds to national debt• Competitive interest rate vs. other

government backed loans• Flexible – ability to provide GAP

financing as well as other supporting products

Page 12: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

12

A Successful Rehabilitation Story

• The Problem• Analysis and Approach• Servicing• Overall Solution

Page 13: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

13

The Problem is Multifaceted1. No Payments – Following the economic crisis, many private

student loan borrowers stopped paying loans altogether or reduced the monthly payments.

2. Loan Share of wallet – Average person has about 15 monthly payments to make (car, housing, insurance, etc). Student loans have dropped from about 9th in priority of the 15 to almost dead last.

3. Increased transiency – Moved home, to other states, etc., becoming harder to track.

4. Servicing operations were not prepared for the volume of delinquencies and defaults. Many similarities to the mortgage business.

5. Increasing % of drops – Some students left the workforce to gain better skills for their next job. Many left school before finishing and do not believe they owe money or just do not pay.

Page 14: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

14

Boston Portfolio Analyzed the Situation

Numerous pieces to the problem were analyzed and then modeled into a comprehensive contact and settlement strategy:Historical payment performance

Economic conditions and credit migration

Portfolio segmentation by numerous categories

Servicing effectiveness vs. cost of service

Estimate rehab success levels

Based on the above, BPA selected the optimal pool that addressed the issues. First Associates took over from there.

Page 15: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

15

First Associates Servicing

Page 16: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

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Rehabilitation Results Prior to BPA Strategy Implementation

•Sporadic Payments

•Inconsistent Cash Flow

•Lower Overall Loan Value

Page 17: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

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Successful Rehabilitation Program Results

•Payment Continuity

•Increased Overall Cash flow

•Higher Loan Values

Page 18: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

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Overall Solution and ResultsResult: Loan owners have a portfolio of paying borrowers with strong cash flows and long term value.

Boston Portfolio and First Associates teamed for a highly successful outcome:

Excellent monthly cash flow

Long term value for sale

High borrower satisfaction levels

Cost effective

Now expanding the program

Page 19: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

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Co- Signers- Loan Rehabilitation

Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12

ACHSettlements

OtherRehabilitatedLoans

Number ofLoans

Page 20: Private Loan Rehabilitation Programs

Navigating the Sea of Change 2012 NCHER Knowledge Symposium

20

Activities for “Rehabbed” Loans

• Analyze portfolio to determine fields captured at origination or servicing

• Skip Trace using credit bureau data

• Review cohort defaults, % of co’s, cell #’s, school info, emails

• Develop campaign strategy

• Social media contacts

• Send out “Welcome Letter” package to co-borrowers

• Text message campaigns to co-borrowers and borrowers

• Voice alerts to co-borrowers and borrowers

• Explanation of outstanding default

• Set up recurring ACH• Be Nice!

Page 21: Private Loan Rehabilitation Programs

Grace Current Delinquent(1-180 days) Default

Physical Mail

• Congratulations• Reminders

• Statements • Statements• Collection Letters with

ACH promo• Outreach Letters• Demand Letters

• Statements• Collection Letters with

ACH promo• Outreach Letters• Demand Letters

Email • Reminders• Educational

materials

• Statements • Reminders• Educational Materials

• Reminders• Educational Materials

Phone • Alerts and Reminders

• Voice Alerts• Outbound IVR• Predictive Dialing• Preview Calls

• Voice Alerts• Outbound IVR• Predictive Dialing• Preview Calls

Text • Alerts and Reminders

• Texting campaigns • Texting campaigns

Door Knocks

• “Knock n Talk”• Field Investigation

• “Knock n Talk”• Field Investigation

Legal Action

• As requested

Skip Tracing

• At boarding• Active monitoring

• At boarding• Active monitoring

• At boarding• Active monitoring• Individual Trace• Social Media Trace

• At boarding• Active monitoring• Individual Trace• Social Media Trace

Ongoing • Cloud Monitoring for utilities, purchases, income, credit changes

• Cloud Monitoring for utilities, purchases, income, credit changes

• Cloud Monitoring for utilities, purchases, income, credit changes

Technologies to Reduce Student Loan Defaults

Navigating the Sea of Change 2012

NCHER Knowledge Symposium

Page 22: Private Loan Rehabilitation Programs

Reducing Defaults and Increasing Recoveriesfor Student Loans

Enhanced Portfolio Performance Program (“EP3”)

Developed and Managed byBoston Portfolio Advisors

Page 23: Private Loan Rehabilitation Programs

Program Management

• Allocate placements among multiple agencies to create a competitive champion/ challenger program

• Manage all placements, close and returns, status updates

• Analyze agency performance and direct new placements to top performers

• Provide agencies with specific settlement levels and operating tactics at the borrower level

Gain Model

• Leverage data from various sources

• Score borrowers, prioritize and calculate NPV

• Forecast probability and amount of repayment

• Match accounts to agencies that perform best in a particular segment

• Focus on the right accounts with the right tactics in collection cycle

23

Program has Two Main Components

Page 24: Private Loan Rehabilitation Programs

24

Gain Model Linkages Sources of Data

Originator/ School

• Demographics• Field of study• % Completion/

GPAServicer • Payment history

• Contact historyAgency • Payment history

• Type/ number of calls

• Settlement strategy and results

Borrower

• Credit data• Income/

EmploymentLoan • Balance size

• Vintage School Profile

• Public/ Private• Proprietary

Gain Model

Tactical Execution

Focus

• Borrower Prioritization

• High Value Segments

Effort Level

• Frequency of Calls/ letters

• Call type• Contact rate• Settlement

parameters• Texting/ social

media utilization

Loan Value

• Liquidation curves• NPV of account

Page 25: Private Loan Rehabilitation Programs

Data Collection From multiple sources

________________________Gain Model analysis and scoring Creates Segmentation and Prioritization of borrowers for targeted contact strategy based on predictive analytics

________________________Program Management Servicing and collection tactics driven at borrower level based on Priority Score

________________________Results monitored, scoring model updatedAccount level tactics revised for optimal results and actionable information provided to all parties

Servicers

Collection

Agencies

School

Servicers

Collection

Agencies

School

PROGRAM MANAGEMENT

Loan Info

Borrower Info

Historical Performance/ Tactics

GAIN MODEL

Feedback Loop

25

Data Flows

Page 26: Private Loan Rehabilitation Programs

Servicing Phase ImpactSegmenting and Prioritizing borrowers from origination through all repayment phases leads to lower cumulative defaults (sample results illustrated below)

26

12.0%

23.0%

28.0%31.0%

33.0%35.0%

37.0%39.0% 39.5% 40.0%

9.0%

17.3%21.0%

23.3% 24.8% 26.3% 27.8% 29.3% 29.6% 30.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1 2 3 4 5 6 7 8 9 10

Cum

ulati

ve Lo

ss F

orec

ast

Years Since Entering Repayment

Current Default Forecast

Gain Model Default Forecast

Potential Savings

Page 27: Private Loan Rehabilitation Programs

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Default Phase Collection Tactics Increase Recoveries

Gain Model Batches

Non Gain Model Batches

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1 2 3 4 5 6 7 8 9 10+

Cumulative Recovery Rate by Batch

52% Improvement

Segmenting and Prioritizing borrowers for more effective collection strategies leads to higher recoveries in Collections (actual results below)

Page 28: Private Loan Rehabilitation Programs

Reallocate Effort based on Scoring and Prioritization

28

• Traditional Industry Approach (Gray bars) used credit bureau recovery score to target borrowers

• Gain Model Approach uses enhanced Segmentation and Prioritization to rank order each borrower based on probability of payment (Green is highest, Red is lowest)

• Improvement using Gain Model Approach can range upwards of 30%-50% higher

0

1

2

3

4

5

6

1 2 3 4 5 6 7 8

Cont

act E

ffort

Inde

x

Segment

Historical AttemptsNew Attempts - High PriorityNew Attempts - Medium PriorityNew Attempts - Low/No Priority

Page 29: Private Loan Rehabilitation Programs

Sample Collection Results Comparison

29

Historical Performance - Produces 5.8% Recovery RateSegment 1 2 3 4 5 6 7 8 TotalHistorical Phone Attempts 295,000 417,000 208,000 278,000 431,000 275,000 317,000 104,000 2,325,000Phone Attempts (% of Historical) 100% 100% 100% 100% 100% 100% 100% 100% 100%Contact Rate 3.2% 2.7% 2.8% 2.3% 1.6% 1.5% 2.5% 3.4% 2.4%Close Rate 18.7% 14.6% 9.8% 8.0% 4.9% 2.6% 18.6% 8.3% 8.9%Realization Rate 80.1% 82.2% 76.0% 79.6% 76.4% 82.7% 83.5% 81.2% 79.4%

Historical Collection Amount Per Phone Attempt ($) $5.61 $3.60 $7.17 $4.54 $0.53 $0.56 $2.87 $7.07 $3.41

Historical Collections $1,656,000 $1,499,000 $1,491,000 $1,261,000 $229,000 $153,000 $908,000 $735,000 $7,932,000% of Total Collections 20.9% 18.9% 18.8% 15.9% 2.9% 1.9% 11.4% 9.3% 100.0%

Historical Placements $10,614,000 $15,389,000 $21,645,000 $28,137,000 $16,999,000 $27,860,000 $7,060,000 $9,053,000 $136,757,000Historical Collection Rate 15.6% 9.7% 6.9% 4.5% 1.3% 0.5% 12.9% 8.1% 5.8%

Improvement by Redistributing Phone Attempts - Increases Recovery Rate by 32%Segment 1 2 3 4 5 6 7 8 TotalPhone Attempts - Redistributed 443,000 521,000 364,000 348,000 154,000 101,000 238,000 156,000 2,325,000Phone Attempts (% of Historical) 150% 125% 175% 125% 36% 37% 75% 150% 100%Contact Rate - No Change 2.4%Close Rate - No Change 8.9%Realization Rate - No Change 79.4%

Projected Collection Amount Per Phone Attempt ($) $5.61 $3.60 $7.17 $4.54 $0.53 $0.56 $2.87 $7.07

Projected Collections $2,487,000 $1,873,000 $2,609,000 $1,579,000 $82,000 $56,000 $682,000 $1,103,000 $10,471,000% of Total Collections 23.8% 17.9% 24.9% 15.1% 0.8% 0.5% 6.5% 10.5% 100.0%

Collection Rate With Redistribution of Phone Attempts 23.4% 12.2% 12.1% 5.6% 0.5% 0.2% 9.7% 12.2% 7.7%

Gain ($) $831,000 $374,000 $1,118,000 $318,000 ($147,000) ($97,000) ($226,000) $368,000 $2,539,000Gain (%) 50% 25% 75% 25% -64% -63% -25% 50% 32%

SAME AS HISTORICAL

Page 30: Private Loan Rehabilitation Programs

Sample Collection Results Comparison

30

Improvement by Redistributing Attempts, and Increasing Contact and Close RatesImprovement Assumptions(% Change) 1 2 3 4 5 6 7 8# Phone Attempts 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Contact Rate 20.0% 15.0% 10.0% 5.0% 0.0% 0.0% 0.0% 0.0%Close Rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%Realization Rate 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Segment 1 2 3 4 5 6 7 8 Total# Phone Attempts 443,000 521,000 364,000 348,000 154,000 101,000 238,000 156,000 2,325,000Call Attempts - Redistributed 150% 125% 175% 125% 36% 37% 75% 150% 100%Contact Rate - Improved 3.9% 3.1% 3.1% 2.4% 1.6% 1.5% 2.5% 3.4%Close Rate - Improved 22.5% 17.6% 11.7% 9.6% 5.9% 3.1% 22.3% 9.9%Realization Rate - No Change 80.1% 82.2% 76.0% 79.6% 76.4% 82.7% 83.5% 81.2%

Projected Collection Amount Per Phone Attempt ($) $8.08 $4.96 $9.46 $5.72 $0.64 $0.67 $3.44 $8.49

Projected Collections $3,581,000 $2,585,000 $3,443,000 $1,989,000 $98,000 $68,000 $818,000 $1,324,000 $13,906,000% of Total Collections 25.8% 18.6% 24.8% 14.3% 0.7% 0.5% 5.9% 9.5% 100.0%Projected Collection Rate 33.7% 16.8% 15.9% 7.1% 0.6% 0.2% 11.6% 14.6% 10.2%

Gain ($) $1,925,000 $1,086,000 $1,952,000 $728,000 ($131,000) ($85,000) ($90,000) $589,000 $5,974,000Gain (%) 116% 72% 131% 58% -57% -56% -10% 80% 75%

Page 31: Private Loan Rehabilitation Programs

Gain Model Results: Number of Future Payers Cumulative Gain

Previous Results: Using Limited Segmentation Attributes

Improved Results: Analytics Using Additional Attributes

Advanced Analytics Model with additional attributes identifies 82% of all future payers vs. 57% for the existing attributes (y-axis) when selecting top 20% of borrowers identified by model (x-axis)

Page 32: Private Loan Rehabilitation Programs

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Incremental Calls

AttemptedContact

Rate

Cumulative Contacts

Made

Cumulative Contact Expense

Payment Rate

Cumulative Accounts

Cumulative Recoveries Profit/Loss

Total 1,000,000 3.23% 32,301 $705,000 18.74% 6,054 $5,614,246 $4,909,246

Decile

Incremental Calls

AttemptedContact

Rate

Incremental Contacts

Made

Incremental Contact Expense

Payment Rate

Incremental Accounts

Incremental Recoveries

Incremental Profit/Loss

Cumulative Profit/Loss

1 100,000 6.50% 6,500 $87,500 28.5% 1,853 $1,717,925 $1,630,425 $1,630,4252 100,000 6.00% 6,000 $87,500 26.0% 1,560 $1,446,674 $1,359,174 $2,989,5993 100,000 5.00% 5,000 $87,500 24.0% 1,200 $1,112,826 $1,025,326 $4,014,9254 100,000 4.00% 4,000 $87,500 22.0% 880 $816,072 $728,572 $4,743,4975 100,000 3.25% 3,250 $87,500 21.0% 683 $632,920 $545,420 $5,288,9176 100,000 2.75% 2,750 $87,500 16.0% 440 $408,036 $320,536 $5,609,4537 100,000 2.00% 2,000 $87,500 15.0% 300 $278,206 $190,706 $5,800,1608 100,000 1.25% 1,250 $87,500 14.0% 175 $162,287 $74,787 $5,874,9479 100,000 1.00% 1,000 $87,500 12.0% 120 $111,283 $23,783 $5,898,72910 100,000 0.50% 500 $87,500 8.9% 45 $41,267 ($46,233) $5,852,497

Total 1,000,000 32,250 $875,000 7,255 $6,727,497 $5,852,497

Results Without Segmentation and Prioritization

Results With Segmentation and Prioritization

Segmentation and Prioritization Improves Profitability

High Response Segment: Comparison of results with and without Segmentation and Prioritization

Page 33: Private Loan Rehabilitation Programs

Page 33

Segmentation and Prioritization Improves Profitability

Low Response Segment: Comparison of results with and without Segmentation and Prioritization

Incremental Calls

AttemptedContact

Rate

Cumulative Contacts

Made

Cumulative Contact Expense

Payment Rate

Cumulative Accounts

Cumulative Recoveries Profit/Loss

Total 1,000,000 1.59% 15,872 $705,000 4.90% 777 $532,087 ($172,913)

Decile

Incremental Calls

AttemptedContact

Rate

Incremental Contacts

Made

Incremental Contact Expense

Payment Rate

Incremental Accounts

Incremental Recoveries

Incremental Profit/Loss

Cumulative Profit/Loss

1 100,000 3.75% 3,750 $55,000 14.0% 525 $359,460 $304,460 $304,4602 100,000 2.75% 2,750 $55,000 8.9% 245 $167,577 $112,577 $417,0363 100,000 2.50% 2,500 $55,000 8.9% 223 $152,342 $97,342 $514,3794 100,000 1.75% 1,750 $55,000 6.0% 105 $71,892 $16,892 $531,2715 100,000 1.50% 1,500 $55,000 3.6% 54 $36,973 ($18,027) $513,2446 100,000 1.00% 1,000 $55,000 2.8% 28 $19,171 ($35,829) $477,4157 100,000 0.95% 950 $55,000 1.8% 17 $11,708 ($43,292) $434,1238 100,000 0.75% 750 $55,000 1.5% 11 $7,703 ($47,297) $386,8269 100,000 0.65% 650 $55,000 1.0% 7 $4,450 ($50,550) $336,27610 100,000 0.25% 250 $55,000 0.5% 1 $856 ($54,144) $282,132

Total 1,000,000 15,850 $550,000 1,215 $832,132 $282,132

Results Without Segmentation and Prioritization

Results With Segmentation and Prioritization

Page 34: Private Loan Rehabilitation Programs

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Sample Gain Model Effort and Performance Results

Collection Agency effort and performance is tracked by BPA Priority Score to ensure Gain Model tactics are consistent with BPA recommendations (color coded results at bottom)

BPA Priority Score # Borrowers

Initial Balance

Amount Collected

# Call Attempts # Contacts # Letters

Collection Time (minutes)

A 34,180 $117,061,342 $11,895,790 1,139,990 80,180 218,160 1,534,771B 66,460 $155,305,797 $1,610,337 1,573,420 32,680 282,560 1,177,039C 63,940 $170,739,747 $521,801 2,079,380 13,480 258,250 843,128

TOTAL 164,580 $443,106,886 $14,027,928 4,792,790 126,340 758,970 3,554,938

BPA Priority Score

% of Borrowers

% of Initial Bal

% of Collected

% of Call Effort

% of Contacts

% of Letters % Time Worked

A 20.8% 26.4% 84.8% 23.8% 63.46% 28.7% 43.2%B 40.4% 35.0% 11.5% 32.8% 25.87% 37.2% 33.1%C 38.9% 38.5% 3.7% 43.4% 10.67% 34.0% 23.7%

TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

BPA Priority Score

Recovery Rate

Collection Factor

Effort Factor

A 10.2% 308% 108%B 1.0% -71.6% -18.0%C 0.3% -90.4% -39.0%

TOTAL 3.2%

Page 35: Private Loan Rehabilitation Programs

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Champion/ Challenger Performance Heat Map

Balance Range Max FICO Agency A Agency B Agency C Agency D Agency E Agency F Agency G Agency H TOTAL Factor

$0-$4,999 Unknown 10.42% 89.58% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% 8.52 $0-$4,999 Below 500 21.66% 78.34% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% 1.67 $0-$4,999 500-549 71.78% 0.00% 3.12% 7.85% 16.48% 0.78% 0.00% 0.00% 100.0% 2.99 $0-$4,999 550-599 38.61% 1.11% 7.16% 21.22% 0.00% 28.08% 3.81% 0.00% 100.0% 3.58 $0-$4,999 600-649 15.76% 0.00% 46.57% 18.02% 9.64% 6.12% 3.89% 0.00% 100.0% 3.36 $0-$4,999 650-699 31.91% 22.83% 2.47% 20.04% 15.47% 0.00% 7.28% 0.00% 100.0% 9.27 $0-$4,999 700-749 28.04% 4.20% 46.84% 12.53% 0.00% 0.00% 8.39% 0.00% 100.0% 8.59 $5,000-$09,999 Unknown 86.18% 0.00% 0.00% 13.82% 0.00% 0.00% 0.00% 0.00% 100.0% (0.65) $5,000-$09,999 Below 500 96.71% 0.00% 3.29% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.02) $5,000-$09,999 500-549 62.97% 9.16% 17.42% 0.00% 0.00% 10.46% 0.00% 0.00% 100.0% (0.67) $5,000-$09,999 550-599 46.13% 5.31% 18.92% 24.34% 1.08% 1.92% 2.31% 0.00% 100.0% 0.69 $5,000-$09,999 600-649 53.46% 8.44% 22.56% 6.90% 0.00% 7.42% 1.22% 0.00% 100.0% 1.10 $5,000-$09,999 650-699 15.35% 35.82% 16.78% 15.84% 0.00% 7.14% 6.57% 2.50% 100.0% 0.33 $5,000-$09,999 700-749 0.36% 2.95% 33.21% 30.43% 0.00% 26.66% 6.38% 0.00% 100.0% 8.95 $10,000-$14,999 Unknown 4.41% 4.41% 0.00% 88.17% 0.00% 3.01% 0.00% 0.00% 100.0% 3.78 $10,000-$14,999 Below 500 21.35% 14.20% 4.73% 18.94% 12.36% 28.41% 0.00% 0.00% 100.0% (0.84) $10,000-$14,999 500-549 39.96% 1.67% 22.43% 26.75% 0.00% 2.51% 6.69% 0.00% 100.0% (0.71) $10,000-$14,999 550-599 11.17% 4.88% 55.88% 15.50% 2.47% 5.93% 4.18% 0.00% 100.0% 0.48 $10,000-$14,999 600-649 13.03% 30.59% 8.73% 0.00% 3.52% 43.74% 0.40% 0.00% 100.0% 0.43 $10,000-$14,999 650-699 15.90% 46.22% 4.06% 26.20% 0.00% 3.56% 1.63% 2.43% 100.0% 0.39 $10,000-$14,999 700-749 24.19% 65.06% 0.00% 0.00% 0.00% 0.00% 0.00% 10.75% 100.0% (0.36) $15,000-$19,999 Unknown 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.90) $15,000-$19,999 Below 500 3.99% 96.01% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.05) $15,000-$19,999 500-549 44.38% 0.00% 9.08% 19.19% 13.43% 13.92% 0.00% 0.00% 100.0% (0.54) $15,000-$19,999 550-599 77.91% 2.55% 7.89% 11.07% 0.00% 0.59% 0.00% 0.00% 100.0% 0.09 $15,000-$19,999 600-649 33.92% 32.57% 17.51% 0.00% 0.00% 7.97% 8.03% 0.00% 100.0% (0.54) $15,000-$19,999 650-699 20.85% 64.46% 0.00% 0.00% 0.00% 8.81% 5.87% 0.00% 100.0% (0.53) $15,000-$19,999 700-749 1.22% 6.83% 0.00% 0.00% 89.18% 0.00% 1.82% 0.95% 100.0% 8.63 $20,000-$29,999 Unknown 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 0.00% 0.00% 100.0% (0.92) $20,000-$29,999 Below 500 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.98) $20,000-$29,999 500-549 79.93% 20.07% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.93) $20,000-$29,999 550-599 26.65% 3.53% 15.87% 27.43% 11.26% 8.41% 6.85% 0.00% 100.0% (0.54) $20,000-$29,999 600-649 9.19% 9.71% 62.86% 9.70% 2.26% 5.67% 0.59% 0.00% 100.0% 0.20 $20,000-$29,999 650-699 25.98% 59.29% 8.00% 0.00% 0.00% -1.07% 7.80% 0.00% 100.0% (0.35) $20,000-$29,999 700-749 11.62% 64.44% 0.00% 18.95% 0.00% 0.00% 4.99% 0.00% 100.0% 0.14 $30,000+ Unknown 0.00% 0.00% 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.51) $30,000+ Below 500 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.94) $30,000+ 500-549 0.00% 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.99) $30,000+ 550-599 13.13% 0.00% 3.75% 0.00% 0.00% 83.12% 0.00% 0.00% 100.0% (0.70) $30,000+ 600-649 79.13% 0.00% 0.00% 20.87% 0.00% 0.00% 0.00% 0.00% 100.0% (0.87) $30,000+ 650-699 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.92) $30,000+ 700-749 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.0% (0.80)

Page 36: Private Loan Rehabilitation Programs

Improvement In Servicing and Collection Phases

Improvements are Realized in Both Phases of Loan Lifecycle

Pre-Default Servicing Phase• Segmentation and Prioritization of loans focuses on accounts with

higher probabilities of payment• Special call and letter campaigns targeted at specific borrowers• Selective forbearance or modification options implemented

Post-Default Collection Phase• Segmentation and Prioritization of loans focuses on accounts with

higher probabilities of payment• Specialized tactics are implemented within each segment to ensure

greatest performance• Improved call strategies to increase contact rates and payments• Settlement offers customized to each borrower based on probability

of payment, contact rates, close rates, and various student attributes

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Page 37: Private Loan Rehabilitation Programs

37

Information Uses

Finance• Cash flow and funding

requirement projections• NPV valuations by loan

and student

Admissions• Probability of

graduation• Probability of

payment• Co-borrower

alternatives

Private Loan Collections Management• Maximize value of

cash receivables• Loss mitigation tactics• Optimize settlement

offers• Identification of

optimal loans for saleFederal LoanCohort Management• Minimize losses• Forecast default

rates for potential action steps

Student Success Monitoring• Tactical

solutions to improve persistence rates

• Student payment behavior

• Performance by Segment

• Probability of graduation

Gain Model information can be harnessed for other purposes