Consumer Outreach – Special Issues – Student Loan Debt Wendy Badger, Chief Compliance Officer ECMC Group, Inc.

Types of Student Loans  Title IV Federal Financial Aid  Federal Family Education Loan Program (FFELP) (no originations after 2010)  Private Lenders  Guaranty Agencies (insures the loans)  Direct Loans  U.S. Government is the lender  Government contractors as student loan servicers  PLUS (parent is borrower)  Perkins Loans  HEAL Loans (through U.S. Dept. HHS)  Private Loans

Federal Student Loans – The Players  Lenders  Servicers  Guaranty Agencies  Educational Institutions

Guaranty Agencies  Agreements with U.S. Department of Education (ED)  501(c)(3) non-profit organizations or state agencies  Designated (by ED) guarantor for specific states  Fiduciary duties to ED  Default aversion and collection activity required by federal regulation

Life Cycle of a Federal Student Loan FAFSA Federal aid eligibility Federal loan eligibility Grants Work Study In School At least half time status Federal loan payments deferred Interest may accrue Grace Period 6 months Graduate Withdraw Drop below half-time status Repayment Monthly payments Standard payment Income- driven plans Deferment Forbearance Delinquent 1 day past due Default aversion assistance 270 days past due = default Default Required by regulation Collection costs Credit reporting Treasury Offset AWG Rehabilitate Consolidate Subrogation (mandatory assignment)

Guaranty Agency Obligations  Guaranty agency due diligence efforts driven by regulation  Default Aversion Assistance Request (DAAR)  Default claim payments – transfers title  Skiptracing efforts  Collection efforts  Adding collection costs (proscribed by regulation)  Reporting default to consumer reporting agency  Certification for Treasury Offset Program  Initiation of administrative wage garnishment  Rehabilitation program  Subrogation/mandatory assignment to Department of Education

Guaranty Agency Obligations  Biennial program reviews of schools and lenders in FFELP  The College Place (access centers)  Financial literacy and outreach  Financial Awareness Basics  Believing the College Dream  Realizing the College Dream  PERSIST  College Nights  Training materials  Speakers  Scholarships

Federal Loan Repayment Options  Standard Repayment plan  Default plan, unless qualified and apply for income-driven repayment plan  10 year repayment plan  Graduated Repayment plan  Payments start low, increase year by year (anticipates income increases)  Up to 10 years to repay  Extended Repayment plan  Loans originated on or after October 7, 1998  Outstanding balance of principal and interest totaling more than $30,000  Up to 25 years to repay (depending on balance)  Income-Driven Repayment plans  Income-based repayment (IBR)  Income-contingent repayment (ICR)  Income-sensitive repayment (ISR)  Pay As You Earn (PAYE) (Direct loans only)

Federal Loan – Suspension of Payments  Available for non-defaulted loans  Limits apply over the life of the loan (e.g., 36 months available)  Deferment  Interest does not accrue on subsidized loans, but does accrue on unsubsidized loans (capitalized if not paid during deferment)  Mandatory for some situations (e.g., active duty military, in-school)  Forbearance  Interest accrues and is capitalized on all loan types  Discretionary

Federal Loan Discharge & Forgiveness Options  Total and Permanent Disability Discharge  Closed School Discharge  False Certification Discharge  Death Discharge  Teacher Loan Forgiveness  Public Service Loan Forgiveness (Direct Loans)  Bankruptcy  Presumption of non-dischargeability  Subject to undue hardship standard

Free Resources for Federal Student Loan Borrowers  National Student Loan Data System (  Tracks federally-insured student loans by Social Security number  Borrower access to their own federal student loan records  When, where, who, status – and who has them  Registration required, PIN protected  Additional Resources   

Questions? Thank you! Wendy Badger Chief Compliance Officer ECMC Group, Inc. (651)