1. Dwight Vigna | Dec. 2014 U.S. Department of Education Student Loan Servicing Summit Default Collection

2. Our Goals Goal 1: Be respectful to borrowers and help them find the best solution to resolve their debt regardless of the commission being paid Goal 2: Increase the efficiency of collection effort to limit student loan program costs for Federal taxpayers 2

3. Default Initial Processing Delinquency day 361, borrowers are added to the Debt Management and Collections System (DMCS) Welcome letter is sent Borrower has 60 days to respond The borrower is directed to our Call Center – 800-621-3115 and our website www.myeddebt.com www.myeddebt.com 3

4. No Response to Welcome Letter Borrower will be reported as in default to Credit Bureaus Borrower is sent to Private Collection Agency The Department adds a collection cost fee of 24.34% of the outstanding P&I to the borrower’s account 4

5. Borrower Responds to Letter Borrower works with the Call Center to resolve their debt No collection costs are added Borrower never talks with a PCA 5

6. PCA Recovery Process Use a “Waterfall” approach for locating the borrower Are required to use the following framework for collections Payment In Full May offer a compromise Rehabilitation Consolidation 6

7. Involuntary Payments PCAs can start the Due Diligence for Administrative Wage Garnishment (AWG) A Federal employee must actually release the letter for garnishment 7

8. Involuntary Payments Treasury Offset Program PCAs have nothing to do with this and receive no compensation Required by law Administrated by Treasury Hardship Hearings Over $2 billion in recoveries last year 8

9. Involuntary Payments Refer to Department of Justice If the PCA finds assets they can create a litigation package for review All packages are reviewed by FSA FSA decides which packages are forwarded to DOJ Once sent to DOJ we only track payments in order to do normal reporting 9

10. PCA Work The PCA must keep each borrower for six months If a borrower is returned they will be transferred to a different PCA 10

11. PCA Oversight We use Call Monitoring of recorded calls 40 calls per PCA per month We look for both what should be said and what should not be said Corrective Action plans are created for issues and we follow up to ensure they are completed On-Site Reviews On-site reviews are done to check on processing and procedures 11

12. QUESTIONS? 12