Ideas for Today and Tomorrow
Taking Collections in a New Direction
Retention,
Receivables and
Repercussions
Best Practices in Managing
Receivables
Retention
•
Number 1 item on the agenda for everyone at the school
•
Retention Committee
• Who is responsible?
•
Why is the student leaving?
• Academic
• Social
• Financial
How do we intercept and change their mind?
From the Beginning
Much of what we do with receivables is done at the
back end or after accounts are in default.
The focus of today’s discussion is what we can do on
the front end to facilitate student payment and
reduce additional debt.
Communication
•
#1 Item of Discussion at Conferences, Offices, and List serves
• What is your preferred method of staying in touch with
your students?
• Email and Snail Mail
•
Social Networking Applications
• Facebook, Wikis, Blogs, Twitter
•
Have you involved students in designing your methods of
communication
Communication
•
Social Networking Applications
• Student Account Applications
• Contact with Student
• Links to School Website/Billing Information
• Notices
• Information on Entrance and Exit Interviews
• Skip Tracing
Communication
•
•
Using Smartphones to
• Make payments
• Register for classes
• Access billing statements
• Entrance/Exit counseling
• Make payments to Collection Agencies
The Next Generation of Technology
Focusing On Processes and
Procedures
Billing
•
Responsibility to Pay
• Statement with signature
• Permission to contact by cell phone
• Promissory Note
•
Cost
• What is included?
• Is each item clearly defined?
Focusing On Processes and
Procedures
The Bill
• What information is included?
• Is the statement easy to understand and designed for the
student?
• What information is available online?
• How do we insure that the student fully understands all
of the terms and conditions?
• Was there student input when the statement was
designed?
Focusing On Processes and
Procedures
Options for Payment
• Are all methods of payment clearly noted and defined?
• Can students make payments online or have their
payments taken directly from their accounts? How about
debiting their parent’s account?
• What about credit cards? How is the fee covered?
Focusing On Processes and
Procedures
•
Are there payment options not discussed in the billing
statement?
•
How are payments from International students handled?
•
Are there outsourcing options? Billing or use of credit
cards?
•
Which is better electronic statements or paper statements?
To which do the students better respond?
Focusing On Processes and
Procedures
What types of payment plans are offered?
• 8 month, 5 month, 4 month, 3 month
• 1/3 down with an additional two payments
• Are all costs included in the payment plan?
• Are students required to have a zero balance before they
can attend?
• How does the system monitor the payments?
Best Practices
•
Cash Payment Monitoring
• Cut off dates
• What is done prior to cut off date?
• Reminders of deadlines
• Telephone calls at 30, 20, 15, 10 days prior to payment
deadline
• Emails (30, 20, 15, 10 days) indicating urgency in payment
– anyone thought about texting?
• Reports to Admissions and Financial Aid Offices
Internal Controls
System Reports
• If billing is 90 days out why not have a 60 and 30 day
report indicating those that have not made payment
• At 30 days does the system have the ability to generate
notices (mail) or emails or text messages
•
•
Notices generated again at 20, 15, and 10 days
This type of monitoring also gives you better data for
forecasting cash and student population
Getting the News Out
•
Get started on introducing a financial literacy program on
your campus
•
Communicate with the campus to let them know what
student needs to do what
•
Survey students to see if they are using the information that
is provided
•
Make sure that the administration is on board with all of the
plans to reduce receivables
•
Make the case to everyone that what you do affects the
entire campus – Students, Faculty and Staff
Become Knowledgeable
•
FDCPA
• Leaving messages
• Third Party Disclosures
• Disputes and Debt Validation
•
TCPA
•
Financial Responsibility Statement
Become Knowledgeable
•
CFPB
•
Statute of Limitations and Time Barred Debt
•
Collection Cost/Contingency Fee
•
Choice of Law
Become Knowledgeable
•
Credit Bureau Reporting
•
Return to Title IV
•
Bankruptcy
•
DOE
•
VA
Know Your Vendors
•
Make sure that you have a contract on file
•
If they are doing ACH, then have a copy of the ACH form
you complete
•
If they are collecting Title IV funds have a copy of the
Attestation Audit on hand
•
Ask for a copy of their financial statements or their fiscal
audit
•
Ask for a copy of their insurance certificates
New Alert News Alert News Alert
Bradley v. Franklin Collection Services, Inc.
In a January 2, 2014, ruling, the Eleventh Circuit Court of
Appeals found that a collection agency may not collect a fee
based on a percentage of the account balance if the original
contract between the consumer and creditor did not specify the
consumer would be responsible for a percentage based fee.
In the case the consumer had signed a patient agreement when
receiving medical treatment that stated, “In the event of
nonpayment…I agree to pay all costs of collection, including a
reasonable attorney’s fee…” The creditor added 33 1/3 percent
before forwarding the account to the collection agency.
News Alert News Alert News Alert
The court ruled that the plaintiff, “agreed to pay the actual
costs of collection; his contractual agreement did not require
him to pay a collection agency’s percentage-based fee where
that fee did not correlate to the costs of collection.”
The court found that the percentage-based fee, assessed before
the collection agency’s attempt to collect, was not related to
the agency’s actual cost of collection, thus breaching the
agreement between the consumer and the creditor. Therefore,
the court held that the collection agency violated the FDCPA
by collecting the 33 1/3 percent fee when the consumer only
agreed to pay the actual costs of collection.
News Alert News Alert News Alert
What does all of this mean to me?
Do you add collection cost (fee charged by the agency to
collect the balance) to the balance that is sent to the agency?
What is the wording that you have in your contract indicating
to the student that they will be responsible for collection cost?
New Alert News Alert News Alert
Talk with your corporate counsel about this decision and how
they think it will impact you.
If you are going to add the contingency fee, then you need to
be explicit as far as what fees are going to be added to the
balance when being placed with a collection agency. i.e.
…agency fees of up to 50% shall be added…
Make sure that you are making the student aware of all
potential costs to them when they default. Make sure that all
policies and procedures are written down and available to
auditors (examiners).
Questions
Micheal Kahler
Vice President, Key 2 Recovery
5448 West Chester Road
West Chester, OH 45069
314-420-4876
888-402-5392
mkahler@key2recovery.com
www.key2recovery.com
What Clients Have To Say
•
“We were looking to shake things up by bringing on a new agency with
the hopes that the performance from all of our collection companies
would improve. We placed a few accounts with Key 2 as a test and they
collected 76.7% of the dollars and average 37.6% across all first referrals,
outperforming all of my other agencies. Now they receive a majority of
our accounts.”
•
-Ed Hendricks, Walsh University, Canton OH
•
“Key 2 was selected through an RFP process at MSU. Key 2’s first
placement after the contract award was a portfolio of 28 accounts that
had already been through most of our other agencies and were closed as
“uncollectable”. In the first couple of months they had found 26 of the
accounts and ultimately collected 16.9% of the principal on those third
and fourth referrals.”
•
-Tina McWain, Morehead State University, Morehead KY
What Clients Have To Say
•
“I have been in the education industry for over fifteen years and worked
with several collection agencies to collect delinquent student receivables.
I was familiar with Key 2 from a prior institution and was very
impressed with their performance and fantastic collection rates. When I
came to Ellis University, I quickly hired them to collect our delinquent
receivables as well. They generated payments immediately and it’s clear
from using Key 2 at two different institutions that Key 2 works hard on
every account. Currently, Key 2 averages 26.5% across all first
placements and collected approximately a quarter of a million dollars for
us in less than a year. I have used at least a dozen different agencies in
my career, both large and small, and none of them have compared to the
results from Key 2. “
•
-Randy Willy, John Hancock University, Chicago IL
What Clients Have To Say
•
“We have been very pleased with Key 2’s performance on our newer
accounts. I had files of older student receivables that had been written
off, some going back 20+ years. So when Key 2 showed interest in
collecting those I seized the opportunity to run a report and place those
with them as well to see what they could do. They collected over 1% in
the first 60 days. I am amazed that they consistently find and collect on
some of the accounts they do, even those going back to the early 90’s.”
•
-Sandy Saggars, Goshen College, Goshen IN
What Clients Have To Say
•
“In my nineteen years at a higher education institution, I have
encountered many sales people. They come to me to sell their product,
bragging that it’s the best in the industry, citing excellent performance in
their line of service. I finally get sold on their product, and never hear
from the sales person again, leaving me only to deal with the CSR, which
is fine. But my biggest, best impression with Key 2 is the communication
I receive from both Doug Plummer and Steve Roberto. Neither hesitate
to pick up the phone to call me on an issue, or shoot me an email. It lets
me know that I’m not a forgotten “old sock”. Not to mention the fact that
their collection efforts are the best I’ve seen, collecting on accounts, some
being ten years old. I would definitely, with highest regards, recommend
them to any company.”
•
-Sheryl Brady, Stephens College, Columbia MO
Philosophy
Our Key2 philosophy is this:
Bring exceptional customer service to the table every day,
don’t just say you’ll treat the borrower with respect but really
do it, and quickly determine the borrower’s ability and
willingness to repay and arrange a creative and attainable
payment plan that will be met on-time and completed. These
are the “Keys to Recovery”.