1. Why is Default Management Everybody’s Business and Why a Plan?
4/20/2017
Why is Default Management Everybody’s Business and Why a Plan?

2. In This Session Section 1: Regulations
4/20/2017
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

3. 4/20/2017
SECTION 1
Regulations

4. Regulations 34 CFR §668.14(b)(15) 34 CFR §668.217
4/20/2017
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 §
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.

5. 4/20/2017
ED Recommendation
The Department recommends that every school implement a default prevention and management plan consistent with § to:
Promote student and school success;
Achieve low CDR; and
Save students from the consequences of default.

6. The Default Management Task Force
4/20/2017
SECTION 2
The Default Management Task Force

7. “Student Success” Approach
4/20/2017
“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.

8. School-Based Default Prevention
4/20/2017
School-Based Default Prevention
Form a Default Prevention Team, set measurable goals and develop or adopt a default prevention plan.
Organize a Default Prevention Task Force.
The Default Prevention Task Force will drive your default prevention process:
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.

9. Default Prevention Task Force
4/20/2017
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, Pan- Hellenic Council).

10. Activities for the Task Force
4/20/2017
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

11. Activities for the Task Force (cont.)
4/20/2017
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.

12. Default Management Strategy
4/20/2017
Default Management Strategy
Organize Task Force
Establish Objectives
Define Default Risk
Outline Actions
Submit Plan
(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.
Define and Identify Risk
Determine who is defaulting and why
Analyze data
Organize a Default Prevention Task Force
Assess resources for team
Identify members
Set Purpose
Detail Responsibility
Set Objectives:
Establish Objectives
Identify steps needed to achieve goal
Outline Actions
Specify actions needed to achieve your goal
Ensure actions are measureable

13. Risks, Interventions, Strategies
4/20/2017
SECTION 3
Identifying Default:
Risks, Interventions, Strategies
and Using The Data

14. Who are your Students? ?% students received GED
4/20/2017
Who are your Students?
?% 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

15. Steps to Identify Default Risk
4/20/2017
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.

16. DM Task Force Responsibility
4/20/2017
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?

17. Reducing DefaultRisk Interventions
4/20/2017
Reducing DefaultRisk Interventions
Two ways to think about reducing default risk:
Assisting borrowers by enhancing their knowledge of loan responsibilities and processes and strengthening their relationship with their loan servicer; and
Assisting borrowers by enhancing educational and employment outcomes.
Examples:
Increase Student Success;
Reduce Program Completion Time;
Strengthen Relationship with Potential Employers; and
Career Placement for both Graduates and Non-Graduates.

18. Reducing DefaultRisk Strategic
4/20/2017
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
Adding general best practices to targeted efforts.

19. Reducing Default RiskPlan Considerations
4/20/2017
Reducing Default RiskPlan Considerations
Specific Intervention Examples:
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.

20. Food for Thought:Post College Risk Factors
4/20/2017
Food for Thought:Post College Risk Factors
Income
Highest Income Earned
Occupation
Indebtedness
Other More Important Loans to Pay
Marital Status, basic skill needs
Number of Dependents
Filing for Unemployment Insurance
Dissatisfaction with Educational Program

21. NSLDS Reports for Default and Delinquency Prevention
SECTION 4
NSLDS Reports for Default and Delinquency Prevention

22. 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:
School Loan Portfolio Report;
Borrower Default Summary;
Exit Counseling; and
Delinquent Borrower Report.

23. 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)
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.

24. Developing a Default Prevention Plan
4/20/2017
SECTION 5
Developing a Default Prevention Plan

25. Involuntary DP Plan? 34 CFR §668.217 Default Prevention Plan
4/20/2017
Involuntary DP Plan?
34 CFR §
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 GEN issued September 2005 (Revised Plan out soon); and
Revise and adjust you plan as needed to maximize your success.

26. Administrative Concerns
4/20/2017
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

27. Administrative Concerns (cont.)
4/20/2017
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 § compliant?

28. Federal Loan Servicers
SECTION 6
Federal Loan Servicers

29. Federal Loan Servicers
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.

30. Servicer Repayment Counseling
During the grace period a loan servicer:
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.

31. Communication Channels for Borrowers
All servicers have toll free numbers for borrowers to contact (phone, fax, and ).
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.). 31

32. 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 32

33. 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
communications.
Partner with the servicers! 33

34. SECTION 7
Resources

35. 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.

36. 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.

37. 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

38. 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:
Loan type;
Loan balance;
Income;
Family size; and
Where you live.

39. FAC: StudentLoans.gov for 2013-2014

40. 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

41. Cohort Default Rate Guide

42. Web Links Cohort Default Rate Delinquency and Default Management
4/20/2017
Web Links
Cohort Default Rate
The Cohort Default Rate Guide
Delinquency and Default Management
Electronic Announcement – Delinquency Prevention Activities
General Servicing Information
Electronic Announcement (EA) – Loan Servicing Information
Assessments
FSA Assessments

43. Additional Resource Operations Performance Management Service Group
4/20/2017
Additional Resource
Operations Performance Management Service Group
CDR calculations and data challenges
Main Line:
Hotline:
Web:

44. Financial Literacy Resources
4/20/2017
Financial Literacy Resources
Lenders and Guarantors
Counseling Resources
Jump$tart Coalition For Personal Financial Literacy
FDIC Financial Education Literacy
Mapping Your Future
National Endowment for Financial Education

45. IF WE DON’T MANAGE HIGH DEFAULT RATES
4/20/2017
IF WE DON’T MANAGE HIGH DEFAULT RATES
WHAT DOES THE FUTURE HOLD FOR OUR STUDENTS?

46. 3 Take-a-ways from this Session
4/20/2017
3 Take-a-ways from this Session
Working with the New Default Prevention Team
Identifying Default Risks
Default Prevention Plans

47. 4/20/2017
FSA Contact Information
Larry Eadie
ET Winzer
We appreciate your feedback and comments!