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

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

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 – and our website

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

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

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

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

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

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

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

11. PCA Oversight We use Call Monitoring of recorded calls On-Site Reviews
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

12. QUESTIONS?