Title IV Participants-Lenders and Servicers

Track the performance of each servicer and lender.

• Use DefaultPrevention.com’s lender and servicer cohort default rate estimates to:
• Benchmark servicers on their default rate, and
• Benchmark lenders on their default rate.

Compare the performance between servicers based upon:

• The number of claims filed per month, and
• The number of claims paid per month

Identify problem areas.

Identify “best practices” among servicers.

Compare apples to apples and apples to oranges

Track the performance of the university, college, or proprietary school’s default management plan.

• Benchmark the institution’s default rate with similar institutions. Gather data from
• DefaultPrevention.com’s reports (www.defaultprevention.com) and
• The Department of Education web site (www.ed.gov).
• Identify how differences between the institutions related to differences in the default ratios.
• Track the present cohort default rate using the following calculation (for schools with more than 30 students entering repayment):

Numerator

_________________x 100

Denominator

Numerator = Number of students who entered repayment during the
fiscal year and defaulted within that fiscal year or the subsequent fiscal
year

Denominator = Number of students who entered repayment during
the fiscal year.

Reallocate a portion of state and institutional grants to award potential defaulters.

Reallocate a portion of work-study funds to award potential defaulters.

Promote scholarships.

Promote conservative borrowing.

Offer comprehensive counseling services:

• Meet one-on-one with potential defaulters who are requesting loans in order to limit debt by determining the student’s
  eligibility for other gift aid such as:
• AFDC exemptions
• State or institutional grants
• Scholarships
• Work-study, and/or
• Educational aid exemptions

Identify the “real costs” of a higher education.

Prepare a realistic budget with the student.

Discuss expenses and money-saving strategies.

Analyze salary surveys.

(Someone who will take ownership in your default rate)

Every financial aid office should hire/assign a full/part time professional to function as a default prevention officer. Ownership of the default rate should be discussed
and this person is responsible for researching and forecasting default rates. Ownership is nothing more than accountability.

General Job Description

The designated default prevention officer should take ownership in your School’s default rate.
This can be a part/full time person depending upon the size of your School. The duties of the this person may include.

• Administer the institution’s default prevention program;
• Serve as a financial aid advisor for an assigned caseload of student aid recipients;
• Serve as a liaison between the office of student financial aid and other campus departments, parents,
  and outside agencies such as student loan lenders, servicers, guaranty agencies, and the Department of Education (ED);
• Render decisions and oversee processes requiring initiative and judgment in responding to the individual needs of students;
• Develop the information needed to prepare reports required by financial aid programs;
• Counsel and advise students regarding their financial options and responsibilities;
• Supervise employees in administration of the school’s default prevention program;
• Manage pre-claims assistance efforts such as telephone and letter campaigns;
• Handle pre-loan and exit-loan counseling and implement enhancements to the prcedures;
• Supervise and perform statistical analysis for internal and external reporting;
• Track the school’s cohort default rate;
• Interpret and implement regulations set forth by ED and state guaranty agencies; and
• Oversee the timely completion of deferments and enrollment history requests by working
  closely with the registrar’s office or assuming the responsibility in the financial aid office.

The position recommends the following education:

• A bachelor’s degree in a field related to the default prevention program, such as
  business, communications, or social work. Or substantial financial aid experience.

Position experience should include:

• Two to three years experience in the appropriate field of the program with two years of responsible administrative experience.
• Preferred two to three years experience in student financial aid loan programs and related outside agencies such as lenders, servicers,
  guaranty agencies, and ED.
• Working knowledge of internet, email, instant messaging, internet browser, database, spreadsheet, and presentation software as well as
  computer hardware.

The Default Prevention Officer must possess the following skills:

• Excellent writing skills,
• Communication skills,
• Interpersonal skills, and
• Organizational skills.

The Default Prevention Officer must be able to:

• Analyze data,
• Forecast and plan,
• Work under pressure,
• Solve problems, and
• Accept and implement change.

Providing comprehensive entrance and exit counseling sessions is an excellent way to educate students on the rights and responsibilities of borrowing a student loan. This type of interactive session creates an environment in which the borrower can ask questions and voice concerns. Requiring students to
attend yearly review sessions will reinforce the information covered during the entrance counseling session.

Spruce up your Entrance Interviews

• Invite loan specialists, lenders, and servicers to present at the sessions.
• Distribute materials containing loan information to the borrowers for future reference.
• Delay certification of loan applications until first time borrowers have attended a session.
• Offer sessions intermittently throughout the semester to promote attendance.
• Offer one-on-one entrance counseling to students who cannot attend group sessions.
• Use entrance counseling features on http://www.mapping-your-future.org/services/oslchow.htm .
• Test borrowers at the end of the session to identify students who may need additional counseling.
• Use test results as an indicator that all relevant information is being covered during the session.
• Discourage multiple lenders and guarantors.
• Provide students with disclosure statements that contain the following information:
• Cumulative amount borrowed,
• Estimated interest, and
• Estimated monthly payment.
• Provide students with loan summaries.
• Update students on changes in financial aid office procedures.
• Remind students of their rights and responsibilities.

Gather updated information from students, including:

• New addresses and telephone numbers,
• Changes in their permanent addresses,
• Reference information, and
• Employment information.

Cover the consequences of default.

• Allow borrowers to use online entrance counseling sites
  offered by lenders and servicers, go to http://www.mapping-your-future.org/services/oslchow.htm .

Delinquent Borrowers- Talk to Them

• Counsel and assist delinquent and/or defaulted borrowers either in person or over the phone.
• Act as a liaison between the student and the lender, servicer, and/or guaranty agency.
• Facilitate the completion of documents such as deferments and forbearances.

Educate delinquent borrowers on repayment options:

• Standard repayment plan,
• Graduated repayment plan,
• Income sensitive repayment plan,
• Repayment incentives offered by servicers, and
• Consolidation.

Educate defaulted borrowers on repayment options:

• Regaining eligibility for Title IV aid,
• Loan rehabilitation, and
• Consolidation.

Counsel excessive borrowers

(to be defined by the individual institution) on a one-on-one basis about:

• Responsible borrowing
• Budgeting
• Debt management plans
• Repayment options, and
• Salary expectations

• Invite lenders and servicers to present at sessions.
• Include and emphasize the correct procedures transfer students should follow when notifying their lenders that they have transferred
  and in filing deferments.
• Provide students with a loan summary that includes the names and phone numbers of lenders, servicers, and guaranty agencies.
• Offer one-on-one exit counseling to students who cannot attend group sessions.
• Let students know they can call the school for assistance; provide them with the name and phone number of a contact person.
• Verify that all exit interview forms are completed in full.
• Administer an exam at the end of the session to identify students who may require additional counseling.
• Send borrowers a letter or brochure during their grace period reminding them of their rights and responsibilities and listing phone
  numbers to call for assistance.

Frequent Updates

REMEMBER TO UPDATE

www.defaultprevention.com

ONLINE DATABASE WITH

ALL CHANGES IN:

ADDRESS

PHONE NUMBERS

REFERENCES

Title IV Partnerships Your Key to Success

For an institution to combat a default rate problem, it must have the support of its own campus in addition to lenders, servicers, and guaranty agencies. 3
Forging alliances facilitates efficiency, learning and promotes progress.

• Include and emphasize the correct procedures transfer students should follow when notifying their lenders that they have transferred and in filing deferments.