ILASFAA Leaves of Change: Harvesting New Ideas A Road to CDR Reduction: Traveling to Lower Rates

ILASFAA Leaves of Change: Harvesting New Ideas Cohort default rates have decreased FY 2011 Official Cohort Default Rate FY 2012 Official Cohort Default Rate

ILASFAA Leaves of Change: Harvesting New Ideas ,956 borrowers defaulted during the FY 2012 cohort period

ILASFAA Leaves of Change: Harvesting New Ideas As of July, 6.9 million Americans with student loans hadn’t sent a payment to the government in at least 360 days. Wall Street Journal, 2015

ILASFAA Leaves of Change: Harvesting New Ideas Whether your cohort default rate increases or decreases, default management is a necessity to ensure all student loan borrowers are successful in repayment and avoid the negative consequences of delinquency and default.

ILASFAA Leaves of Change: Harvesting New Ideas Look Beyond the Percentages 289 Default in Default in Default in % Cohort Default Rate 11,600 borrowers who entered repayment in ,600 Fabulous University has a 7.1% CDR

ILASFAA Leaves of Change: Harvesting New Ideas Look Beyond the Percentages 322 Default in Default in Default in % Cohort Default Rate 6,100 borrowers who entered repayment in ,100 Marvelous University has a 13.5% CDR

ILASFAA Leaves of Change: Harvesting New Ideas Look Beyond the Percentages Fabulous UniversityMarvelous University Number of borrowers in default:830 Number of borrowers in repayment:11,6006,100 Default rate:7.1%13.6%

ILASFAA Leaves of Change: Harvesting New Ideas Agenda Knowing where you’re headed Tracking where your rates are trending Picking your destination Identifying your target borrowers 1 Packing the right resources Conducting outreach 2 3 Using GPS tools Locating unknown borrowers 4 Utilizing trip advisors Using resources 5

ILASFAA Leaves of Change: Harvesting New Ideas TRACKING WHERE YOUR RATES ARE TRENDING

ILASFAA Leaves of Change: Harvesting New Ideas Draft Rates Do not wait until you receive your draft rates to begin thinking about default prevention Track your rate throughout the year – Monthly – Quarterly

ILASFAA Leaves of Change: Harvesting New Ideas CDR Timing FY2012 cohort period – Borrowers entered repayment between 10/1/11 and 9/30/12 and defaulted between 10/1/11 and 9/30/14 FY2013 cohort period – Borrowers entered repayment between 10/1/12 and 9/30/13 and default between 10/1/12 and 9/30/15 FY2014 cohort period – Borrowers entered repayment between 10/1/13 and 9/30/14 and default between 10/1/13 and 9/30/16 FY2015 cohort period – Borrowers entered repayment between 10/1/14 and 9/30/15 and default between 10/1/14 and 9/30/17

ILASFAA Leaves of Change: Harvesting New Ideas Which Cohort Period(s) Should You Track? FY2012 FY2013 FY2014 FY2015

ILASFAA Leaves of Change: Harvesting New Ideas What to Track Data needed – Number of borrowers already in default – Number of borrowers 240 up to 270 days delinquent – Number of borrowers in repayment

ILASFAA Leaves of Change: Harvesting New Ideas Step 1 – How to Track 19 borrowers defaulted in 2014, 2015, % Current Cohort Default Rate 289 borrowers entered repayment in CDR

ILASFAA Leaves of Change: Harvesting New Ideas Step 2 – How to Track 19 defaulted borrowers + 34 borrowers (240 or more days delinquent) in 2014, 2015, and % Projected Cohort Default Rate 289 borrowers entered repayment in CDR

ILASFAA Leaves of Change: Harvesting New Ideas Save Your Borrowers Once you determine how many borrowers in your cohort could impact your CDR, try to save them Utilize delinquency reports to obtain borrower demographic data – NSLDS DELQ01 report – Loan servicer reports

ILASFAA Leaves of Change: Harvesting New Ideas IDENTIFYING YOUR TARGET BORROWERS

ILASFAA Leaves of Change: Harvesting New Ideas Types of Targeting Proactive targeting – Withdrawals – Graduating – In-grace At-risk targeting – Non-completion – Incurring high balances – Defaulting

ILASFAA Leaves of Change: Harvesting New Ideas Conduct a Defaulted Borrower Analysis Enables you to develop specific strategies to help students avoid default Allows you to correct ineffective practices throughout your institution Enables you to identify high risk students Helps you to analyze the relationship between loan default and student success

ILASFAA Leaves of Change: Harvesting New Ideas Who’s Most Likely to Default Late registrant Transfers/reverse transfers Not meeting satisfactory academic progress Low GPA Withdrawals Required to take development classes First-time students Received GED Excessive debt

ILASFAA Leaves of Change: Harvesting New Ideas Why Are They Defaulting Understand the “why” – Financial issues – Relationship issues – Dependent care – Transportation – Health issues – Poor study habits – No campus connection

ILASFAA Leaves of Change: Harvesting New Ideas Why Are They Defaulting Understand the “why” – Lack of employment opportunities? – Multiple loans—confusion? – Excessive financial obligations? – Lack of family support?

ILASFAA Leaves of Change: Harvesting New Ideas Analyze Your Defaulted Borrowers Obtain a Loan Record Detail Report (LRDR) – The report is available as a preformatted report or as a data file extract – NSLDS refers to the LRDR extract as the SCHDREOP file Query your own internal system to obtain specific demographic data for the defaulted borrowers on your LRDR extract

ILASFAA Leaves of Change: Harvesting New Ideas CONDUCT OUTREACH

ILASFAA Leaves of Change: Harvesting New Ideas Purpose of Outreach Provide services to populations who might not otherwise have access to those services Fill in the gap in the services provided by the mainstream

ILASFAA Leaves of Change: Harvesting New Ideas Purpose of Default Prevention Outreach Provide services (repayment assistance) to populations (borrowers) who might not otherwise have access to those services Fill in the gap in the services (repayment assistance) provided by the mainstream (loan servicers)

ILASFAA Leaves of Change: Harvesting New Ideas Phases of Outreach Determine the goal Identify a specific demographic Study their needs Create a program to help them learn or recover

ILASFAA Leaves of Change: Harvesting New Ideas Phases of Default Prevention Outreach Determine the goal – Help 20 borrowers resolve their delinquency Identify a specific demographic – Late-stage delinquent borrowers Study their needs – Resolve delinquency before they default Create a program to help them learn or recover – Make calls and connect them with their servicer EXAMPLE

ILASFAA Leaves of Change: Harvesting New Ideas Outreach When sending s: – Utilize school’s address – Use creative subject line to get the borrower’s attention – Keep it precise, yet informative – Avoid including personally identifiable information

ILASFAA Leaves of Change: Harvesting New Ideas Letter Outreach When sending letters: – Highlight what you want them to know most in bold or color – Encourage them to contact their servicer if they have questions – Sign by hand

ILASFAA Leaves of Change: Harvesting New Ideas Letter Outreach Hand write envelopes Use stamps Get creative with the envelopes – Colors – Special messages (i.e. “Savings Inside”) – Stickers Get Them to Open the Letter

ILASFAA Leaves of Change: Harvesting New Ideas Phone Outreach When making calls: – Let borrowers know there are options available to help manage their student loan debt/resolve delinquency – Connect them to their servicer

ILASFAA Leaves of Change: Harvesting New Ideas Phone Outreach When making calls: – Use a pleasant tone – Use voice volume control – Listen – Stay calm – Don’t take comments personally – Show empathy – Thank them…regardless of outcome

ILASFAA Leaves of Change: Harvesting New Ideas LOCATING UNKNOWN BORROWERS

ILASFAA Leaves of Change: Harvesting New Ideas Locating Borrowers Many borrowers who are difficult to find – Left school without completing – Have neglected their loan payment obligation – Are avoiding other creditors – Move and change telephone numbers frequently – Are confused – Fear the problem is too deep to find a way out

ILASFAA Leaves of Change: Harvesting New Ideas Locating Borrowers 1.Review reports for unknown contact information – NSLDS Delinquency Borrower Report (DELQ01) – Loan servicers’ reports 2.Utilize internal and external resources to locate delinquent borrowers 3.Update contact information to federal servicers

ILASFAA Leaves of Change: Harvesting New Ideas Locating Borrowers Yahoo People Search Google Whitepages.com Voter registration records Property tax assessor Military locator Professional licensing records Alumni sites Federal and state prison locators

ILASFAA Leaves of Change: Harvesting New Ideas Social Media Social media can be used to gather information to help locate a borrower – Date of birth – City – Place of employment – Married or changed name

ILASFAA Leaves of Change: Harvesting New Ideas Social Media Facebook MySpace Twitter Foursquare Flickr LinkedIn Instagram

ILASFAA Leaves of Change: Harvesting New Ideas Free vs. Fee-based Default Management Resources

ILASFAA Leaves of Change: Harvesting New Ideas Pros and Cons of Free Tools Pros Free Flexibility Students may respond to school rather than outside vendor Cons Requires more time and/or people May need to use multiple tools Training required Salary expense Employee turnover

ILASFAA Leaves of Change: Harvesting New Ideas Pros and Cons of Fee-based Tools Pros Proven-strategies and results More resources Expanded availability Cons Cost Fee structure may be complex Limited to one company Lack of transparency

ILASFAA Leaves of Change: Harvesting New Ideas Benefits of Having a Default Prevention Action Plan

ILASFAA Leaves of Change: Harvesting New Ideas Why Have a Plan? Provides you with a roadmap of activities that you can implement Shows your institution’s commitment to default prevention Helps to garner across-the-institution buy-in Ensures default prevention goals are met Helps justify additional resources Strongly encouraged by the Department of Education (GEN-05-14

ILASFAA Leaves of Change: Harvesting New Ideas USING FREE RESOURCES

ILASFAA Leaves of Change: Harvesting New Ideas Resources Cohort Default Rate Guide – DefaultManagement/ CDRGuideMaster.html

ILASFAA Leaves of Change: Harvesting New Ideas Resources NLSDS Reports DRC015 DRC016 Repayment Loan Info Detail Report provides the current repayment status of certain borrowers in the FFEL and Direct Loan programs who attended a school during a specific period, either 24 months (DRC015) or 36 months (DRC015) DER001 The Date Entered Repayment Report is a list of student borrowers who are scheduled to go into repayment during a specific date range. SCHDF2 The Borrower Default Summary Report provides a list of loans that currently have a default loan status and a loan status date that falls within the requested range SCHPR1 The School Portfolio Report provides school users with information about all Direct or FFEL loans for a specified school. DELQ01 The Delinquent Borrower Report provides school users a report of borrowers who have been reported as delinquent in making loan payments to one of the federal loan servicers

ILASFAA Leaves of Change: Harvesting New Ideas CONCLUSION

ILASFAA Leaves of Change: Harvesting New Ideas Follow the Road to Reducing Rates Know where you stand throughout the year Identify your at-risk borrowers Conduct various types of outreach to ensure you touch the borrowers that need your help most Help locate unknown borrowers Take advantage of free resources

ILASFAA Leaves of Change: Harvesting New Ideas Thanks for Attending Bill Henderson Senior Marketing Consultant Great Lakes (877)