Debt Management Practices Throughout the Borrower Lifecycle
Wanda StoverNorth Carolina State Education Assistance
Authority
Linda ViauVermont Student Assistance Corporation
Bill KohlNational Student Loan Program
Part IHistorical Perspective
Linda L. ViauAssociate DirectorVermont Student Assistance Corporation
Historical Perspective• for years, holders of student loans
focused their activities on effective default collection strategies
• over time, that focus has drastically changed to early intervention and default prevention
• Why the switch?– U.S. economic downturn– exacerbated by the events of September
11th
– tight job market– consumer credit crunch
Sequence of Events
• May 2001 - NCHELP’s Debt Management Committee developed a survey to determine some of the practices being utilized by the industry
• Summer of 2003 - the Debt Management Committee identified the need for additional information on industry practices
Sequence of Events (continued)
• intent was to identify “best practices” utilized within the industry (with measurements) and then share the results with its colleagues
• FSA at ED was working on a similar project
• Fall 2003 – Default Prevention Subcommittee of Debt Management Committee designs survey
Sequence of Events (continued)
• survey initially sent to Subcommittee members as a trial
• January 2004 - NCHELP Board approves the use of the survey
• March 2004 - survey was sent to all NCHELP members
• Summer and Fall of 2004 - results tabulated and follow up completed
Components of the Survey
• all NCHELP members invited to respond• privacy maintained• activities listed and detailed with an
indication of ‘where’ in the borrower lifecycle the activities would occur
• matrices were developed for eachNCHELP organization– guaranty agency– lender/holder– third party servicer
Types of Activities Included
• high school outreach• counseling• communication methods• financial planning• default prevention tools• training• research and development• technology• skip tracing
Borrower Life Cycles• outreach• in school• grace• repayment• delinquency
End Users• school• student• other organization
Part II
Examples of Survey Responses
• financial aid counselors and co-sponsored programs
• website• publications
Early Outreach Examples
• on-line calculator• on-line presentations• consumer credit counseling in
schools
In-School Examples
• web-based grace period information• early withdrawal counseling program • skip tracing
Grace Period Examples
• web-based repayment information
• default prevention workshops • on-line counseling
Repayment Examples
• counseling via telephone• claim aversion strategies• default management systems
Delinquency Examples
Part III
Examples of Initiatives Developed by Nebraska, North Carolina, and Vermont
Presented by Bill KohlVice President of OperationsNSLP
Money Management Counseling for students
Money Management Counseling• available at www.nslp.org• click on Loan Education Products
and then Money Management Counseling
• features free interactive tools students can use to manage money
• designed with input from financial aid professionals to meet student needs
Features interactive courses
Credit and Debtprovides information on budgeting, credit, and student loans
At the Bankhelps students understand how banks and bank accounts work
Home Financeteaches fundamentals of finding, renting and owning a home
Living within a budget
Budgeting Workshop includes…• worksheet to outline needs, wants,
expenses, and long-term goals• budget calculators to compare
income to expenses for:– current college students– recent graduates– full-time employees
Budgeting Workshop
Types of credit cards
Your credit history
At the Bank
Checking accounts
Keeping a checkbook
Balancing your checkbook
Choosing an account
Choosing an account
Home Finance
Renting 101
Why buy?
Refinancing
Take the quizeach course features an interactive quiz to help students review the course
Your credit rating
The value of things you own
Your FICO score
1. Your net worth is an assessment of:
Take the QuizPrint this quiz
disclosure statement
Credit statement
APR comparison chart
2. Credit cards are required to include a _________ in their promotional materials.
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Interactive Quiz
split APR
prime rate
sub-prime rates
3. If you have a bad credit score, you may be limited to loans with:
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Interactive Quiz
a person who borrows on credit
the individual or company who lends money on credit
the company that keeps a record of credit history
4. A creditor is:
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Interactive Quiz
Completion certificate
Certificate of Achievement
This certifies that
has successfully completedNSLP’s course,
CREDIT AND DEBT
Congratulations!
• it’s free!• it’s easy!• visit www.nslp.org
– click on Loan Education Products and then Money Management Counseling
– the site will guide you through each course
Money Management Counseling
Questions?
Bill KohlVice President of OperationsP.O. Box 82507Lincoln, NE 68501-2507
phone800-735-8778, ext. [email protected] 402-479-6658 www.nslp.org
For more information…
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