slide1
Download
Skip this Video
Download Presentation
Federal Policy and Education Debt Management

Loading in 2 Seconds...

play fullscreen
1 / 14

Federal Policy and Education Debt Management - PowerPoint PPT Presentation


  • 354 Views
  • Uploaded on

Federal Policy and Education Debt Management. NYSFAAA Conference – October 28, 2009 State of Industry - New World of Student Lending - Panel Paul C. Combe – President and CEO. A Growing Social Issue. ASA Confidential and Proprietary Information. 2. Trends in Student Debt.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Federal Policy and Education Debt Management' - Antony


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide1
Federal Policy and

Education Debt Management

NYSFAAA Conference – October 28, 2009

State of Industry - New World of Student Lending - Panel

Paul C. Combe – President and CEO

a growing social issue
A Growing Social Issue

ASA Confidential and Proprietary Information

2

trends in student debt
Trends in Student Debt
  • 49% of Bachelor’s Degree recipients had debt in 1992-1993; increased to 65% in 1999-2000
      • Choy % Li , 2005
  • In 2007-2008 two-thirds of Bachelor's Degree recipients graduated with student loan debt:
      • Average debt - $23,186
      • Cumulative debt is growing at 5.6% per year or $1139
  • Of Bachelor’s Degree recipients who applied for federal aid and had AGI less than $25,000, 86.8% had average debt of $24,951
  • More Pell Grant recipients graduate with student loans than non recipients

Source: Growth In Cumulative Education Debt at College Graduation by Mark Kantrowitz (July, 2009) (FinAid.org)

ASA Confidential and Proprietary Information

3

consequences of default
Consequences of Default

Ruined Credit Record:

Unable to purchase home

Unable to obtain car loan

Credit scores effect eligibility for apartment / employment

Wage garnishment

Tax refunds offset

No additional financial aid

ASA Confidential and Proprietary Information

4

we know how many default
We know how many default
  • Cohort Default Rate 2007-2009 6.7%
  • Trigger Rate 2007 2.05%
  • ED Cumulative Default Rate (10 years) 13%
  • We don’t know how many borrowers have serious trouble, but don’t default
    • No federal data collected
    • ASA’s estimate, based on Trigger Rate Data is that at least 25% and 30% of all borrowers are delinquent more than 90 days each year

ASA Confidential and Proprietary Information

5

what are the implications of growing debt for colleges
What are the implications of growing debt for colleges?
  • Not just about enrollment
  • Alumni repayment and “brand tail”
  • Although donations grew by 18% in 2005, “The percentage of alumni making gifts declined”
      • Kaplan 2007:3
  • ASA Study with Miami University of Ohio
      • “Student Debt and Alumni Giving”

(ASA’s report on student debt and alumni giving is available in the “Press Room” at www.amsa.com. Click on “Reports & Studies.”)

ASA Confidential and Proprietary Information

6

giving effected by loans
Giving Effected by Loans

Alumni who graduated without any college loans were slightly more than twice as likely to donate (20.9%) than were those who graduated with debt repayment responsibility (9.8% ). (MWU Sample)

ASA Confidential and Proprietary Information

7

total loan debt high vs low debt
Total Loan Debt: High vs. Low Debt

Graduates with low TOTAL loans (< $20,000) are more likely to contribute to their alma mater (34.0%) than those with higher TOTAL loans (18.2%). (ASA Sample)

ASA Confidential and Proprietary Information

8

monthly debt repayment none vs high
Monthly Debt Repayment: None vs. High

Those without debt responsibility were almost four times more likely to donate money than those with high debt repayment (>$175,000); 23.7% as compared to 6.4%. (MWU Sample)

ASA Confidential and Proprietary Information

9

sense of debt burden
Sense of Debt Burden

Students who “felt overburdened” by student loan debt were less likely to contribute than those who did not feel overburdened (2.5% vs. 16%). (MWU Sample)

ASA Confidential and Proprietary Information

10

sense of debt hardship
Sense of Debt Hardship

Alumni who agreed with the statement “My loan repayments cause me more hardship than I anticipated” were less likely to contribute to their alma mater (4.4% vs. 15.2% contributed). (MWU)

ASA Confidential and Proprietary Information

11

debt management service as a borrower right
Debt Management Service as a Borrower Right
  • America has chosen debt as the primary method for funding access to higher education
  • You get what you measure
  • Access doesn’t end until the loan is repaid
  • If federal policy helps get them into debt, it is a federal responsibility to provide assistance to help them get out of debt
  • Education Debt Management = Entitlement

ASA Confidential and Proprietary Information

12

what is education debt management
What is Education Debt Management?
  • Effective education debt management is not just due diligence with a prescribed amount of letters and phone calls
  • Borrower based for all federal loans, source of capital is irrelevant
  • It’s about using federal college loans as “teachable moments”:
    • Debt Management is a “contact sport”
    • Use continuum of intervention / education activity (proactive and reactive) to target, engage, and impact the borrower’s financial wellness
    • It is proactive and focused on getting the right information to the right borrower at the right time
      • Moments of Truth
    • It is individualized and personalized
    • Uses CRM tools

ASA Confidential and Proprietary Information

13

slide14
(800) 999-9080

(617) 728-4670 F A X

(800) 999-0923 T D D

www.amsa.com

American Student Assistance®

100 Cambridge Street, Suite 1600

Boston, MA 02114

ad