Debt Management Practices: What Works for You

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Debt Management Practices What Works for You?

• Anita Kermes

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Teamwork

• School Lender
• Servicer Guaranty Agency

Borrower
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Tools - Opportunities for Education

• Early outreach awareness
• Publications
• Videos
• Websites

• Loan counseling
• In-school
• Grace
• Delinquency counseling

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Online Money Management
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Tools - Opportunities for Education

• Financial planning tools
• Calculators
• Presentations
• Research and development
• Defaulter analysis
• Research reports
• Training and workshops

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Timing - Communication Methods

• What has been most effective?
• Snail mail
• Electronic mail
• Telephone

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New Web Tool!
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Ensuring Students Success

• School Lender
• Servicer Guaranty Agency

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Kentucky Higher Education Student Loan Corporation
Tom Wantuck
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Established

• The Default Prevention team started in January
  2003 and became fully staffed and operational in
  July 2003
• Team consists of a Team Lead, Assistant Team Lead
  and 8 team members

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Reasons Needed for a Default Prevention Team

• In the year 2002 the contact ratio was extremely
  low on high delinquency accounts
• Monthly claims filed were extremely high

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Mission

• Decrease the delinquency rate of KHELSC portfolio
• Educating borrowers
• Payment Options
• Implications of defaulting on student loans
• Importance of good credit history

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Low Delinquency Default Prevention

• Call campaign
• Repayment brochure
• Outlines repayment options that the borrower has

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High Delinquency Default Prevention

• 180-270 days past due
• Additional efforts used on accounts in claim
  filed status

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Default Prevention Efforts

• Phone calls made to home, work, and all
  references
• Email merge program used to mass email delinquent
  accounts worked
• Check school status
• Internet skip tracing
• Credit bureau reports on accounts greater than
  5,000 and 200 days past due
• Employment and driver license checks in state of
  Kentucky and Illinois
• Working with the Kentucky Higher Education
  Assistance Authority for possible borrower
  location information

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Check School Status

• National Student Clearinghouse
• NSLDS

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Internet Skip Tracing

• Real EDA
• Online directory assistance

• Accurint
• Online locate and research tool to find borrowers

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When Contact is Made

• Ask for payment first
• Or try to enroll in a payment plan
• Questions
• Educate borrower- loan is their responsibility
• In school/employed?
• Deferment/forbearance offered
• Advise about all default consequences

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Default Prevention Statistics

• July-December 2003
• Accounts saved 10,963,422.92
• Claims recalled 1,736,804.47

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Email

• We email borrowers at 180 days past due and again
  when they reach 225 days past due
• Contact Ratio 45

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Claims Filed cont

• Since the addition of the Default Prevention
  team, we were able to lower the amount of claims
  being filed and borrowers defaulting.

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Claims Filed Chart
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Future Goals

• Educate borrowers at earlier stages of
  delinquency
• Importance of good credit history
• Implications of default
• Budgeting tools

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The other side

• From a post-default perspective, we see the
  majority of defaults have one thing in common.
• NO CONTACT with the borrower prior to default.
• With aggressive skip trace campaigns post-default
  we can find 80 of our borrowers prior to going
  into our skip queues.

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Thank You! _____

• Tom Wantuck