2. Gordon Oliver Student Loan Counseling Manager FCAA Instructor for Student Loan Counselors

3. About the FCAA
The FCAA is a 27-member trade association primarily comprised of non-profit credit counseling agencies.
We represent the common interests of member agencies on state and federal legislative issues.
We promote best practices in the counseling profession, ensuring that all who seek help with credit and debt problems receive the highest quality assistance.

4. The FCAA’s Mission FCAA member agency services include:
Credit counseling
Housing counseling
Student loan counseling
Bankruptcy counseling
Financial literacy education

5. Involved An FCAA dinner with Senator Elizabeth Warren, the driving force behind the creation of the Consumer Financial Protection Bureau and a vocal critic of the high interest rates being paid by today’s student loan borrowers.

6. Reliable Services
FCAA member agencies are examined regularly by a number of government entities, confirming their compliance with applicable laws and regulations.
Credit counseling services – Examined by multiple state banking departments
Housing counseling services – Examined by HUD
Bankruptcy counseling services – Examined by the Executive Office for United States Trustees
The FCAA also conducts “mystery shopping” examinations of its own agencies to ensure compliance.

7. Wall of Compliance

8. Consumer Debt on a National Scale
Total consumer debt in May 2016 was $11.8 trillion. A record $929 billion of that amount is revolving credit (unsecured debt.)
In 2016, charge-offs are roughly 4.5% for all loan types.
Consumers spend approximately 15 cents of every dollar to repay debt.
Consumers with high debt/poor credit are in limbo, ineligible for additional loans and almost certain to begin defaulting as their interest rates climb.

9. The Impact of Debt in the Workplace
Studies indicate that workers distracted by financial issues are significantly less productive.
Financially troubled workers are more prone to miss work.
The quality of the work they manage to complete is affected.

10. Student Loan Counseling

11. Millennials Emotions

12. The Student Debt Crisis
Today’s average public university graduates with more than $35,000 in debt.
Student loan debt makes up about 10% of the $11.8 trillion in American consumer debt, and it’s growing approximately 7 times faster than consumer debt as a whole.
Average 30 – 33k 4 yr degree
Sl makes up 10% of American Consumer Debt and growing 7 times faster

13. Total Debt
Green Auto Lime CC Red Student Loan Debt

14. Student Loan Growth
Light Blue Cumulative growth of Household debt less Student loans
Red Cumulative Student Loan Growth

15. Return on your Investment????
25 – 34 years of age with Bachelors degree

16. The Student Loan Crisis

17. Student Loans – A crisis for all consumers
Growth of student loan debt/default rates are a unique, long-term challenge to lenders and consumers. Student loans don’t expire.
Student loan debt, if improperly managed, is a barrier to additional borrowing for homes, cars, business start-ups, building savings, and full participation in the economy.
Dept. of Education and federal loan servicers take a superficial approach. Predatory “relief” companies are gouging consumers. Holistic counseling is required.
Natural parallel to standard credit counseling. We look at all of consumer’s debts and all federal repayment options, not just deferment and forbearance.
43% of borrowers who hold federal student loans are either behind or not paying at all
Student Loan debt challenges – long term - do not expire
Challenges future lending start ups savings
DOE and servicers take a shallow approach – predatory “relief” Companies
Natural parallel

18. Student Loans – Impact On Millennials
“Wake up and smell the coffee”
45% of survey respondents didn’t know what percentage of their salary went to paying off their loans.
• 37% were unaware of the interest rate on their loan.
• A very oblivious 15% were even unaware of how much they owe.
• 44% claimed not to fully understand the difference between federal and private loans.
Unclear on plans
57% regret how much they borrowed
Lack information or choosing not to know from several studies

19. Student Loans – Impact On Millennials and Housing
Lack information or choosing not to know from several studies

20. Student Loans – Impact On Millennials and Housing
Report from American Student Assistance and National Association of Realtors shows 71% of student loan borrowers cited their college loans as main prohibitive factor
Delayed Home purchases
SL payments affect down payments
Loan approval issues
Report from American Student Assistance and National Assosiation of Realtors shows 71% of student loan borrowers cited their college loans as main prohibitive factor
More than half said they expect their student debt to delay their home purchase by five years or more.
4 out of 5 millennial non-homeowners in the NAR/ASA survey said student loans were affecting their ability to save up a down payment.
14 percent or more of your income toward a student loan — as 1 in 5 young borrowers did in 2013, according to a Harvard Joint Center study — on top of a car payment or a credit card balance, that doesn’t leave much room for a mortgage.

21. Scam relief agencies are out there, charging fees between $600 and $2000 up front, or 10% of your loan balance. They use logos that mimic federal seals and headlines like “We’ll Help You with the Obama Loan Forgiveness Plan.” There is no such thing.

22. What is Effective Student Loan Counseling?
Analyze client’s current financial situation, including all income, expenses and debts.
Evaluate eligibility for all federal repayment programs
Discuss future outlook and address pros and cons of the programs
Develop short- and long-term goals and game plan
Implement best repayment option

23. Why is comprehensive student loan counseling needed?
Servicers are interested in getting a payment, not in finding the best option for someone’s personal budget and financial goals. There’s also a disincentive to keep student loans out of default.
Keeping a loan current only earns a student loan servicer $13 per borrower.
Getting a defaulted borrower to resume making payments will earn the servicer $2,000, or 2.75% of the total balance if the borrower consolidates to a new loan and resumes repaying, plus 16% of any amounts collected through garnishment.

24. Why is comprehensive student loan counseling needed?
There is no shortcut to good counseling. Agencies that only offer consolidation, or band-aids like deferments and forbearances – ignoring all other debts and the circumstances that led to them, will harm more consumers than they help.
Consumers may need an expert to wade through the federal guidelines and identify their options.
30+ loan types
More than 100 repayment solutions
An effective strategy may use multiple repayment options simultaneously. .
No short cut
Need expert – Slade 700 questions – 30 plus loan types – more than 100 repayment solutions
Servicers only interested in payment – Govt issues 93% of Student loans – 3 Mil 30 days behind 7 Mill in default
Certified non Profit Counseling is best

25. Avg. Monthly Savings: $450 a month!
60% consolidating all or some of their loans
57% enrolling at least one loan in an Income Driven Repayment Plan
30% taking advantage of forbearance to delay payments for 60 days while applications are processed
21% setting up PSLF and/or TLF
6% enrolling at least one loan in either the Graduated, Extended or Graduated Extended plans
4% Rehabilitating at least one loan out of default

26. FCAA Student Loan Counseling Training
Our program is broken down into 4 sections and we cover:
State of Student Loans
Student Loans Types and Programs
Real World Application of Student Loan Programs
Enrollment in Student Loan Programs

27. FCAA Student Loan Counseling Training Cont’d
Our program provides financial counseling professionals with the proper tools to help the consumer:
30+ loan types
More than 100 repayment solutions
An effective strategy may use multiple repayment options simultaneously.
Long and short term goals for the entire financial portfolio

28. Questions?