Problem Borrowers or Borrowers with problems? How and why schools can help influence repayment success

Problem Borrowers or Borrowers with Problems? Default Rates defined Influencers Effect and impact on your school What you can do Best practices

Expected Life Cycle of Loan Defaults

Current Rate (1%) – All Defaults/All Loans

Matured Loan Rate (4%) – All Defaults/Loans in Repay

Annual Rate (0.25%) – Annual Defaults/All Loans

Cohort Default Rate (5%) – 3 Year Snapshot

Ultimate Default Rate (10%) – All Projected Defaults/All Loans

Major Default Rate Influencers Portfolio Development - passage of time Student Demographics - Who are the borrowers Underwriting Standards – credit scoring Graduation/Withdrawal Rates – educational value Servicing and Collections – marginal influence Aggregate Borrowing – not always what you think

Impacts on a School Loan Availability – Elimination of access Loan Pricing – Lower rates and fees Reputation – proxy for quality Recruitment – proxy for value Retention – Family resources dry up

Impacts within a school Admissions – access and pricing = enrollment Bursar – Tuition and Fees get paid on time Alumni – Happy donors Financial Aid – Difficult job a bit easier Administration – Proxy for institutional quality and value

What Can a Student Do? School Selection - Affordability Apply for “free money” - unclaimed scholarships Major - its potential earning power/loan amount Post graduation living budget – realistic? In-school Payments - 8% x 4 x $13,000 = $4,160 (PAYCE) Employment and resume - help Loan Modification - before it is a crisis!

What can a School Do? Secure institutional attention - Why it is important. Provide pre-acceptance counseling –what life will be Develop a 4-year borrowing plan – coupled with salary Identify high risk students - remedial work Financial Literacy – BUDGETS!!! Assist servicers - locate borrowers, but NOT collect

Best Practices - Sharing Resume Assistance Alumni networking Job placement Identify cities and states that offer repayment assistance Military or other assistance programs