Reducing Delinquency and Default Prevention - PowerPoint PPT Presentation

Loading...

PPT – Reducing Delinquency and Default Prevention PowerPoint presentation | free to download - id: cd0a4-NTM4Z



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Reducing Delinquency and Default Prevention

Description:

You can estimate the approximate dollars in default at your school. ... 0001-01-0001 CHARM JIM K 06/07/1949 99999900 01/18/2000 05/11/2000 1 ... – PowerPoint PPT presentation

Number of Views:56
Avg rating:3.0/5.0
Slides: 47
Provided by: paul423
Learn more at: http://www.masfap.org
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Reducing Delinquency and Default Prevention


1
Reducing Delinquency and Default Prevention
  • Mark C. Walsh
  • Default Prevention Team
  • U.S. Department of Education
  • Federal Student Aid

2
Topics
  • Incorrect Data Challenges
  • EDs Default Prevention Plan
  • Characteristics of Defaulted Borrowers
  • Three Quick Prevention Tips
  • Late Stage Delinquency Assistance

3
Defaults in the Stafford Loan Program
  • 400 billion in outstanding federal
    student loans
  • Nearly 30 million borrowers
  • 50 in FFEL and DL consolidation
  • Average outstanding consolidation balance is
    18,240

4
Beyond the CDR Dollars in Default
  • Demands our attention
  • Equally important as the CDR
  • Dollars in default continue to grow even

as the national cohort default rate has decreased
over a period of years
5
Beyond the CDR Dollars in Default
  • What is your schools contribution?
  • You can estimate the approximate dollars in
    default at your school.
  • 1,000,000 (origination volume)
  • x 5 (estimated school CDR)
    ___________
  • 50,000 (approx dollars in default)

6
Definition of CDR
  • For schools having 30 or more borrowers entering
    repayment in a fiscal year, the CDR is the
    percentage of borrowers entering repayment on
    certain FFEL and/or DL Program loans during that
    fiscal year and default within the CDR
    period.
  • For schools with 29 or fewer borrowers entering
    repayment in a fiscal year, the CDR data includes
    borrowers entering repayment over a three-year
    period.

7
CDR Included Loans
  • Federal Family Education Loan Program
  • Subsidized Stafford Loan
  • Unsubsidized Stafford Loan
  • Supplemental Loans for Students Loan
  • William D. Ford Federal Direct Loan Program
  • Subsidized Stafford Loan
  • Unsubsidized Stafford Loan

8
Cohort Default Rate Periods

9
CDR Review
FFEL DL
Loan data for CDR calculation stored in NSLDS
Formula
For FY 2004 N Default during 2 year
period 10/1/2003 9/30/2005
D Enter repayment during 1 year period 10/1/2003
9/30/2004
Guidepage 2.1-6
10
CDR Denominator in the Formula
  • Determine Date Entered Repayment (DER)
  • Date of graduation, withdrawal, or less
    than half-time status
  • plus 181 days (6 months 1 day) DER
  • Using the DER, determine the correct cohort
    year in which the student will be counted

11
CDR Numerator in the Formula
  • Loan must be included in denominator
  • Determine default date (361 day of delinquency or
    Claim Paid Date CPD)
  • Determine if default date falls within cohort
    period

12
Quick CDR Review
Calculated 2 times/year
Draft CDR February (FY 04 1/7/06,
2/13/06) Calculated/released
Official CDR September (FY 04 7/29/06,
9/11/06) Calculated/released
  • Not public
  • No sanctions
  • No benefits
  • Public
  • Sanctions
  • Benefits

13
CDR Applying the Formula
  • Non-Average Rate
  • 30 or more borrowers in repayment
  • Average Rate
  • less than 30 borrowers in repayment
  • 3 years of data

14
Example Using the Non-Average Rate Formula
Calculation For a school with 30 or more
borrowers entering repayment in a fiscal year

5
(N)
100
X

2.2
225
(D)
15
Example Using the Average Rate Formula
Calculation For a school with less than 30
borrowers entering repayment in a fiscal year
5
3 1 1
(N)

10.6
100
X

47
20 17 10
(D)
FY04 FY03 FY02
The sum of the three most
recent cohort periods
16
Sanctions Associated with High CDR
  • 3 most recent official CDRs 25.0 or greater
    (e.g. FY 2004, 2003, 2002)
  • Loss of eligibility to participate in FFEL,
    Direct Loan, and Pell Grant Programs
  • Current year official CDR is greater than 40.0
  • Loss of eligibility to participate in FFEL and
    Direct Loan programs

17
Incorrect Data Challenge
An incorrect data challenge is the process by
which a school challenges any errors contained in
its draft cohort default rate data.
18
Incorrect Data Challenge
  • Eligibility
  • All schools are eligible to challenge
  • Time frames
  • The challenge must be postmarked within 45
    calendar days of receiving the most recent draft
    CDR. (For FY 04, challenge timeframe ends on
    4/7/06.)

19
Incorrect Data Challenge
  • Borrower incorrectly reported
  • Borrower incorrectly included
  • Borrower incorrectly excluded

20
Complete Incorrect Data Challenge
  • Send to each data manager
  • Letter
  • Spreadsheet
  • Page(s) of LRDR
  • Supporting documentation

21
Sample Letter
22
Sample Spreadsheet
 
FY 2004 Incorrect Data Challenge    
Electrical Training Institute OPE ID 11111
Guarantor/servicer code 111 Number
of borrowers 1 Number of loans 2
 
23
Loan Record Detail Report (LRDR)
1
U.S. DEPARTMENT OF EDUCATION
CALCULATION DATE 07/31/2004
NATIONAL STUDENT LOAN
DATA SYSTEM (NSLDS)
PAGE NO 1
COHORT YEAR 2002 OFFICIAL LOAN RECORD DETAIL
REPORT (SCHOOL) 0 Attention
ALEXANDER PEACHUM
Organization ID Number 99999900
Name GRAPHIC TECHNOLOGY
Address 9765 ARTS LANE
City CORAL CITY
State IOWA Sort Selection
SSN Country
Postal Code 12345-6543 Program
Type FFEL/DL Years 1 ------------------
---------------------- STUDENT -------------------
---------------------- Original -------- CLASS
------ Academic SSN Last name
First/M.I.
D.O.B School Begin Date End Date
Level ----------- ------------------------------
----- ------------- ----------
-------- ---------- --------- -------- 0 -
LENDER/SVCR/HOLDER - -- Loan - Claim Rsn/
DEFAULT/ Guarantor/
Guaranty Enrollment Stat/ Usage
Originating Current Type Stat Code
NegAm Date Repay Date Amount Servicer
Loan/Date Code Date 1 2 -----------
--------- ---- ---- ---------- -----------
---------- ------ --------- ----------
---------------- ----- 0001-01-0001 CHARM
JIM
K 06/07/1949 99999900 01/18/2000 05/11/2000
1 8888888888 9999999999 SU RP
00/00/0000 06/12/2002 2,000 666
04/24/2000 G 12/13/2001 D FD 0001-01-0001
CHARM
JIM K 06/07/1949 99999900
08/21/2000 05/10/2001 2 8888888888
9999999999 SU RP 00/00/0000
06/12/2002 783 666 10/12/2000 G
12/13/2001 E E 0001-01-0002 NOON
SUN M
06/07/1949 99999900 08/21/2000 05/10/2001 2
8888888888 9999999999 SF DF DF
11/22/2002 06/12/2002 2,834 666
10/12/2000 G 12/13/2001 B FB 0001-01-0002
NOON
SUN M 06/07/1949 99999900
08/20/2001 12/13/2001 2 8888888888
9999999999 SF DF DF 11/22/2002
06/12/2002 1,471 666 08/24/2001 G
12/13/2001 E E 0002-00-0003 TREAT
DENZEL A
06/19/1981 99999900 08/23/1999 05/11/2000 1
8888888888 9999999999 SF FB
00/00/0000 11/07/2001 2,625 666
02/08/2000 G 12/13/2001 D FD 0002-00-0003
TREAT
DENZEL A 06/19/1981 99999900
08/21/2000 05/10/2001 2 8888888888
9999999999 SF FB 00/00/0000
11/07/2001 3,500 666 01/30/2001 G
12/13/2001 E E 0003-00-0004 XU
MARK R
02/28/1969 99999900 01/16/2001 05/10/2001 1
8888888888 9999999999 SF DA
00/00/0000 02/17/2002 1,313 666
02/05/2001 W 12/12/2002 D FD 0003-00-0004
XU
MARK R 02/28/1969 99999900
01/16/2001 05/10/2001 1 8888888888
9999999999 SU DA 00/00/0000
02/17/2002 1,021 666 02/05/2001 W
12/12/2002 E E -Default Rate Usage 1 D
Denominator, B Numerator/Denominator, N Not
Used, E Eligible but not counted Default Rate
Usage 2 FD FFEL Denominator, FBFFEL
Numerator/Denominator, DD Direct
Denominator,DBDirect Numerator/Denominator,
IC ICR (Negative Amortization
Only), N Not Used, E Eligible but not
counted
INFORMATION PROTECTED BY THE PRIVACY ACT OF 1974
AS AMENDED
School Information
OPEID Number
Line 1
Line 2

Line 1
Line 2
Abbreviations
24
Loan Record Detail Report (LRDR)
1
U.S. DEPARTMENT OF EDUCATION
CALCULATION DATE 07/31/2004
NATIONAL STUDENT LOAN
DATA SYSTEM (NSLDS)
PAGE NO 1
COHORT YEAR 2002 OFFICIAL LOAN RECORD DETAIL
REPORT (SCHOOL) 0 Attention
ALEXANDER PEACHUM
Organization ID Number 99999900
Name GRAPHIC TECHNOLOGY
Address 9765 ARTS LANE
City CORAL CITY
State IOWA Sort Selection
SSN Country
Postal Code 12345-6543 Program
Type FFEL/DL Years 1 ------------------
---------------------- STUDENT -------------------
---------------------- Original -------- CLASS
------ Academic SSN Last name
First/M.I.
D.O.B School Begin Date End Date
Level ----------- ------------------------------
----- ------------- ----------
-------- ---------- --------- -------- 0 -
LENDER/SVCR/HOLDER - -- Loan - Claim Rsn/
DEFAULT/ Guarantor/
Guaranty Enrollment Stat/ Usage
Originating Current Type Stat Code
NegAm Date Repay Date Amount Servicer
Loan/Date Code Date 1 2 -----------
--------- ---- ---- ---------- -----------
---------- ------ --------- ----------
---------------- ----- 0001-01-0001 CHARM
JIM
K 06/07/1949 99999900 01/18/2000 05/11/2000
1 8888888888 9999999999 SU RP
00/00/0000 06/12/2002 2,000 666
04/24/2000 G 12/13/2001 D FD 0001-01-0001
CHARM
JIM K 06/07/1949 99999900
08/21/2000 05/10/2001 2 8888888888
9999999999 SU RP 00/00/0000
06/12/2002 783 666 10/12/2000 G
12/13/2001 B FB 0001-01-0002 NOON
SUN M
06/07/1949 99999900 08/21/2000 05/10/2001
2 8888888888 9999999999 SF DF DF
11/22/2002 06/12/2002 2,834 666
10/12/2000 G 12/13/2001 E E 0001-01-0002
NOON
SUN M 06/07/1949 99999900
08/20/2001 12/13/2001 2 8888888888
9999999999 SF DF DF 11/22/2002
06/12/2002 1,471 666 08/24/2001 G
12/13/2001 E E 0002-00-0003 TREAT
DENZEL A
06/19/1981 99999900 08/23/1999 05/11/2000 1
8888888888 9999999999 SF FB
00/00/0000 11/07/2001 2,625 666
02/08/2000 G 12/13/2001 D FD 0002-00-0003
TREAT
DENZEL A 06/19/1981 99999900
08/21/2000 05/10/2001 2 8888888888
9999999999 SF FB 00/00/0000
11/07/2001 3,500 666 01/30/2001 G
12/13/2001 E E 0003-00-0004 XU
MARK R
02/28/1969 99999900 01/16/2001 05/10/2001 1
8888888888 9999999999 SF DA
00/00/0000 02/17/2002 1,313 666
02/05/2001 W 12/12/2002 D FD 0003-00-0004
XU
MARK R 02/28/1969 99999900
01/16/2001 05/10/2001 1 8888888888
9999999999 SU DA 00/00/0000
02/17/2002 1,021 666 02/05/2001 W
12/12/2002 E E -Default Rate Usage 1 D
Denominator, B Numerator/Denominator, N Not
Used, E Eligible but not counted Default Rate
Usage 2 FD FFEL Denominator, FBFFEL
Numerator/Denominator, DD Direct
Denominator,DBDirect Numerator/Denominator,
IC ICR (Negative Amortization
Only), N Not Used, E Eligible but not
counted
INFORMATION PROTECTED BY THE PRIVACY ACT OF 1974
AS AMENDED
C
D
E
H
F
A
B
G


CDR Guide Chapter 2.3
25
Loan Record Detail Report (LRDR)
U
V
S
T
N
O
P
I
J
  1
U.S. DEPARTMENT OF EDUCATION
CALCULATION DATE 07/31/2004
NATIONAL STUDENT
LOAN DATA SYSTEM (NSLDS)
PAGE NO 35 OPEID 99999900
COHORT YEAR 2002 OFFICIAL LOAN RECORD DETAIL
REPORT (SCHOOL) ----------------------------------
------- STUDENT ----------------------------------
------- Original -------- CLASS ------
Academic SSN Last name
First/M.I. D.O.B
School Begin Date End Date Level
----------- -----------------------------------
------------- ----------
-------- ---------- --------- -------- 0 -
LENDER/SVCR/HOLDER - -- Loan - Claim Rsn/
DEFAULT/ Guarantor/
Guaranty Enrollment Stat/ Usage
Originating Current Type Stat Code
NegAm Date Repay Date Amount Servicer
Loan/Date Code Date 1 2 -----------
--------- ---- ---- ---------- -----------
---------- ------ --------- ----------
---------------- ----- 0003-00-0005 YOUTH
JAZZ D
11/28/1975 9999900 08/21/1995 05/10/1996 2
0101 0101 D2 DA
00/00/0000 12/17/2001 2,172 0101
12/21/1995 G 05/31/1996 E E 0003-00-0006
WISHING
STAR B 11/17/1980 99999900 08/23/1999
05/11/2000 1 8888888888 9999999999 SF DF
DF 08/31/2003 02/21/2002 1,330
666 02/02/2000 W 05/10/2001 B
FB 0003-00-0006 WISHING
STAR B 11/17/1980
99999900 08/21/2000 05/10/2001 1
8888888888 9999999999 SF RP
00/00/0000 02/21/2002 1,514 666
09/21/2000 W 05/10/2001 E E
FFEL DIRECT
DUAL
------------- ------------- -------------
TOTAL DOLLARS IN DEFAULT 20,360
14,895 35,255 (Based on
Outstanding Principle Balance) TOTAL DOLLARS IN
REPAYMENT 345,943 52,014
397,957 (Based on Outstanding Principle
Balance) TOTAL INSURANCE CLAIM PAYMENTS
0 Not Available -Actual
Numerator Count 20
Report Count 20(B Usage
1 Codes only) Actual Denominator Count
147 Actual Default Rate 13.6 Report Count
147(D B Usage 1 Codes) INDIVIDUAL
PROGRAM TALLY FFEL 15/135 DIRECT
5/19 Appealed Rate flag N (DDirect,
IIndirect, NNo Appeal, UUnknown)
IC 0 (Negative Amortization
Only) 0
End of Loan Record Detail Report
Report Generation Date
09/30/04 -Default Rate Usage 1 D Denominator,
B Numerator/Denominator, N Not Used, E
Eligible but not counted Default Rate Usage 2
FD FFEL Denominator, FBFFEL Numerator/Denominat
or, DD Direct Denominator,DBDirect
Numerator/Denominator, N
Not Used, E Eligible but not counted
M
L
K
Q
R







CDR Guide Chapter 2.3
26
Supporting Documentation
     
David Smith SSN 222-22-2222
 
27
Incorrect Data Challenge
Review and analyze the data shown on the LRDR
against the schools records
Identify inaccurate data and provide supporting
documentation and relevant LRDR
Receive draft LRDR
Prepare a spreadsheet and cover letter for each
data manager where inaccuracies occur
  • Send the incorrect data challenge(s) to each
    data manager where inaccuracies occur
  • Send within 45 calendar days of receiving the
    draft CDR data

Data manager responds within 30 calendar days
28
Defaulter Characteristics
  • 84 did not receive the full 6 month grace period
    due to late enrollment notification
  • 71 withdrew without completing studies
  • 56 had bad telephone numbers
  • 83 were not successfully contacted by telephone
    during the 360 day collection effort

Represents Direct Loan Portfolio Only

29
Defaulter Characteristics
  • 84 did not receive the full 6 month grace
    period

This statistic is directly related to untimely
and/or inaccurate enrollment reporting
30
Withdrawals
71 withdrew without completing their studies
  • These students are at extremely high risk for
    default
  • Early identification is a key
  • Retention effort

31
Defaulter Characteristics
  • 56 had bad telephone numbers
  • 83 were not successfully contacted by telephone
    during the 360 day collection effort

32
Default Prevention and Management Plan
  • The new sample plan includes activities that
  • Promote student, school, and loan
    program success
  • Are easy to implement and do not require much
    in the way of resources
  • DCL GEN-05-14

33
Default Prevention and
Management Plan
  • Section I. Overview
  • Increase retention
  • Reduce borrower defaults
  • Promote school success

34
Default Prevention and
Management Plan
  • Section II. Early Stages of Enrollment
  • Entrance Counseling
  • Financial Literacy for Borrowers
  • Early Identification of At-Risk Borrowers
  • Communication Across Campus
  • Default Prevention/Retention Staff

35
Default Prevention and
Management Plan
  • Section III.
  • Late Stages of Enrollment
  • Exit counseling
  • Withdrawals
  • Timely and accurate enrollment reporting

36
Default Prevention and
Management Plan
  • Section IV. After students leave school
  • Early Stage Delinquency Assistance (ESDA)
  • Late Stage Delinquency Assistance (LSDA)
  • Maintain Contact with Former Students
  • Analyze Defaulted Loan Data to Identify Defaulter
    Characteristics

37
Default Prevention and
Management Plan
  • Section V.
  • Enhanced Entrance/Exit Counseling
  • Requests for borrower information
  • Information about repaying the loan
  • Reminders about personal financial management and
    Title IV loans

38
Default Prevention and
Management Plan
  • Section VI.
  • Tools and activities for schools
  • Assessments for default prevention and management
  • General connections/publications Loan counseling
  • Enrollment reporting and data accuracy
  • Default prevention

39
Three Quick Prevention Tools
  • Loan Record Detail Report
  • NSLDS Reports
  • Late Stage Delinquency Assistance

40
NSLDS Reports
  • Date Entered Repayment Report
  • School Repayment Info Loan Detail
  • School Cohort Default Rate History
  • Enrollment Reporting Summary

41
Late Stage Delinquency Assistance (LSDA)
  • Identify borrowers who did not respond to Lender,
    GA or DL Servicer loan counseling
  • Contact and support student to take constructive
    action they will listen to you.

42
Borrower Delinquency Pattern
35
Stafford Borrower Delinquency Pattern
30
12 month average
25
Percentage of Total
Delinquency
20
15
10
5
0
31-60
61-90
91-120
121-150
151-180
181-210
211-240
241-270
271-300
301-330
331-360
Days Past Due
43
Why does LSDA Work?
  • Schools feel it is the right thing to do
  • It is achievable
  • Students typically respond well to
    schools
  • It doesn't take a lot of resources
  • The results are dramatic!

44
Contact Information
Default Prevention and Management Main
202-377-4258 Hotline 202-377-4259 Email
fsa.schools.default.management_at_ed.gov Web
ifap.ed.gov/DefaultManagement/DefaultManagement.ht
ml
45
Federal Student Aids Default Prevention Team
  • Mark Walsh Eileen Marcy
  • 816-268-0412 215-656-3249
  • mark.walsh_at_ed.gov eileen.marcy_at_ed.gov
  • Craig Rorie John Pierson
  • 215-656-5916 404-562-6269
  • craig.rorie_at_ed.gov john.pierson_at_ed.gov

Let us know how we can help you!
46
Questions?
Thank you!
About PowerShow.com