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Collecting Private Student Loans in Troubled Times

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Consumers can no longer tap equity in their homes for cash ... Internet/music subscription on cell phone. iTunes & expensive coffee drinks ... – PowerPoint PPT presentation

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Title: Collecting Private Student Loans in Troubled Times


1
Collecting Private Student Loans in Troubled Times
  • Presented by Todd Tallman
  • March 31, 2009

2
Times are Tough
  • 8 Unemployment
  • Consumers can no longer tap equity in their homes
    for cash
  • Credit Crunch has eliminated many consolidation
    options
  • Increased regulation of both Collection industry
    and Student Loan industry

3
A Little Good News
  • The Misery Index (Unemployment Rate
  • Rate of Inflation) in the United States is down
  • Misery Index was 7.63 in January of 2009
  • It was more than twice that from 1974 to 1982
  • All Recessions have 1 thing in common
  • They eventually end!
  • www.miseryindex.us

4
Fewer delinquent borrowers
  • Identify high risk borrowers before they enter
  • repayment by analyzing those that default
  • What characteristics did they share before
  • they entered repayment?
  • Application for additional loan was denied
  • School separation date less than 4 years after
    date of first disbursement

5
Contact high risk borrowers early
  • People operate under the WIIFM principal so
  • give them a reason to work with you
  • Offer 1 additional month of grace period
  • Free Resume Tips
  • Free Job Interview Tips
  • If you work with recruiters, see if they can help

6
Create budget give it to them
  • Compare their income to their expenses see if
    they can afford their student loan payment
  • If not, start counseling them immediately on ways
    to decrease their expenses and increase their
    income
  • They arent in repayment yet, so they have time
    to change their situation

7
Eliminate Luxuries
  • High speed internet
  • Satellite/Cable television
  • Net Flix Game Fly
  • Internet/music subscription on cell phone
  • iTunes expensive coffee drinks
  • Show them how much money that will save
  • them over time!

8
Reducing Expenses Increasing Income
  • Suggest additional ways they can reduce
  • their expenses or increase their income
  • Roommates
  • Put Utilities on Budget Billing
  • Stop eating out
  • Car pool or Use public transportation
  • Get a part time job
  • eBay

9
Dont forget the basics
  • Make sure they have all the information
  • they need in order to pay you
  • The amount due date of their payment
  • All methods of payment
  • Your website, Email, phone number address
  • Make sure they know, you are here to help

10
Increasing Right Party Contacts
  • Ask borrowers how they prefer to Communicate
  • Internet, Email, Web Chat
  • Calls Text Messages to their cell phone
  • Calls to landline phone
  • Letters sent snail mail
  • Use the communication channel they prefer

11
Capture historical data and use it
  • Track every contact with each borrower and
  • use that data to schedule collection attempts
  • Best communication channel for each borrower
  • On most successful day of week
  • At most successful time of day

12
Reduce the need for contact
  • Delinquent borrowers dont want contact, so
  • allow them to pay without it
  • Inbound IVR with automated payment
  • Outbound calls with automated payment
  • Web payments
  • Text Email with click to pay links
  • Virtual Collector Website
  • Constantly promote all options!

13
Identify High Risk Borrowers
  • Use scoring to identify high risk borrowers at
  • 1 day past due
  • Start collection attempts sooner
  • Make more attempts
  • Utilize all communication channels
  • During best contact time and day of week

14
Maximize impact of dialer calls
  • Vary dialer campaigns by risk
  • Low risk borrowers - Agent-less campaigns, AVM
    campaigns with automated payment option
  • Medium risk borrowers Predictive campaigns
  • High risk borrowers Individual work lists in
    power or preview mode

15
Vary Outbound Caller ID
  • Dont use the same number on all outbound
  • calls
  • Your company has many numbers---use them
  • Make sure the number is toll free or the area
    code where your office resides
  • Make sure borrowers can reach you by calling that
    number

16
Be Creative with Letters
  • Send Special Letters to highest risk
  • borrowers with biggest balances no contact
  • Lumpy Letter
  • Loud Letter
  • Business Reply Mail
  • Use novelty stamps and colored envelopes
  • Mail Tubes

17
Field Calls
  • Send Agent to homes of high risk
  • Borrowers with big balances no contact
  • Dont ask for or accept payment
  • Dont disclose existence of a debt
  • Confirm address telephone number
  • Try to get consumer to call you

18
Focus on Your Employees
  • Collecting can be challenging Collecting
  • during a recession can be difficult
  • People are your greatest resource
  • As well as your biggest expense
  • Turnover is very expensive it ruins
    productivity

19
Solutions Based Collections
  • Approach each call from the perspective
  • How can I help this customer?
  • Increase communication
  • Focus on short term goals
  • Offer more training keep it brief and specific
  • Run more contests with immediate rewards

20
We are all in this together!
  • Make the most of your membership in industry
    groups Like NCHELP SLSA
  • Join trade organizations like ACA International
    (www.acainternational.org)
  • Network and share best practices

21

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