1. Consumer Outreach: Special Issues – Student Loan Debt
Prepared for:
NACARA
Consumer Outreach: Special Issues – Student Loan Debt
Wendy Badger
Chief Compliance Officer
ECMC Group, Inc.

2. 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

3. Federal Student Loans: The Players
Lenders
Servicers
Guaranty Agencies
Educational Institutions

4. The Players: 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

5. Life Cycle of Federal Student Loans
FAFSA
Federal aid eligibility
Federal loan eligibility
Grants
Work Study
In School
At least half time status
Federal loan payment deferred
Interest may accrue
Grace
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)

6. 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

7. 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

8. Federal Student 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)

9. Federal Student Loan Repayment Options
Income-Driven Repayment plans
Income-based repayment (IBR)
Income-contingent repayment (ICR)
Income-sensitive repayment (ISR)
Pay As You Earn (PAYE) (Direct loans only)

10. Federal Student 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

11. Federal Student Loan: Discharge and Forgiveness
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

12. Free Resources for 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

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