PROBLEM BORROWERS OR BORROWERS WITH PROBLEMS HOW AND

PROBLEM BORROWERS OR BORROWERS WITH PROBLEMS? HOW AND WHY SCHOOLS CAN HELP INFLUENCE REPAYMENT SUCCESS

PROBLEM BORROWERS OR BORROWERS WITH PROBLEMS? • DEFAULT RATES DEFINED • INFLUENCERS • EFFECT AND IMPACT ON YOUR SCHOOL • WHAT YOU CAN DO • BEST PRACTICES

EXPECTED LIFE CYCLE OF LOAN DEFAULTS

CURRENT RATE (1%) – ALL DEFAULTS/ALL LOANS

MATURED LOAN RATE (4%) – ALL DEFAULTS/LOANS IN REPAY

ANNUAL RATE (0. 25%) – ANNUAL DEFAULTS/ALL LOANS

COHORT DEFAULT RATE (5%) – 3 YEAR SNAPSHOT

ULTIMATE DEFAULT RATE (10%) – ALL PROJECTED DEFAULTS/ALL LOANS

MAJOR DEFAULT RATE INFLUENCERS • PORTFOLIO DEVELOPMENT - PASSAGE OF TIME • STUDENT DEMOGRAPHICS - WHO ARE THE BORROWERS • UNDERWRITING STANDARDS – CREDIT SCORING • GRADUATION/WITHDRAWAL RATES – EDUCATIONAL VALUE • SERVICING AND COLLECTIONS – MARGINAL INFLUENCE • AGGREGATE BORROWING – NOT ALWAYS WHAT YOU THINK

IMPACTS ON A SCHOOL • LOAN AVAILABILITY – ELIMINATION OF ACCESS • LOAN PRICING – LOWER RATES AND FEES • REPUTATION – PROXY FOR QUALITY • RECRUITMENT – PROXY FOR VALUE • RETENTION – FAMILY RESOURCES DRY UP

IMPACTS WITHIN A SCHOOL • ADMISSIONS – ACCESS AND PRICING = ENROLLMENT • BURSAR – TUITION AND FEES GET PAID ON TIME • ALUMNI – HAPPY DONORS • FINANCIAL AID – DIFFICULT JOB A BIT EASIER • ADMINISTRATION – PROXY FOR INSTITUTIONAL QUALITY AND VALUE

WHAT CAN A STUDENT DO? • SCHOOL SELECTION - AFFORDABILITY • APPLY FOR “FREE MONEY” - UNCLAIMED SCHOLARSHIPS • MAJOR - ITS POTENTIAL EARNING POWER/LOAN AMOUNT • POST GRADUATION LIVING BUDGET – REALISTIC? • IN-SCHOOL PAYMENTS - 8% X 4 X $13, 000 = $4, 160 (PAYCE) • EMPLOYMENT AND RESUME - HELP • LOAN MODIFICATION - BEFORE IT IS A CRISIS!

WHAT CAN A SCHOOL DO? • SECURE INSTITUTIONAL ATTENTION - WHY IT IS IMPORTANT. • PROVIDE PRE-ACCEPTANCE COUNSELING –WHAT LIFE WILL BE • DEVELOP A 4 -YEAR BORROWING PLAN – COUPLED WITH SALARY • IDENTIFY HIGH RISK STUDENTS - REMEDIAL WORK • FINANCIAL LITERACY – BUDGETS!!!

BEST PRACTICES - SHARING • RESUME ASSISTANCE • ALUMNI NETWORKING • JOB PLACEMENT • IDENTIFY CITIES AND STATES THAT OFFER REPAYMENT ASSISTANCE • MILITARY OR OTHER ASSISTANCE PROGRAMS