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Section 1: Regulations
Section 2: Default Management Task Force
Section 3: Identifying Default
Section 4: NSLDS Reports
Section 5: Developing a Plan
Section 6: Federal Loan Servicers
Section 7: Resources

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34 CFR § 668.14(b)(15)
Schools participating for the first time or that have undergone a change in ownership that resulted in a change of control are required to use a default prevention and management plan to participate in Title IV programs.
34 CFR § 668.217
Institutions that have a 3-Year Cohort Default Rate of 30 percent or greater for any one federal fiscal year is required to establish a Default Prevention
Task Force to reduce defaults and prevent the loss of institutional eligibility.

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The Department recommends that every school implement a default prevention and management plan consistent with § 668.217 to:
• Promote student and school success;
• Achieve low CDR; and
• Save students from the consequences of default.

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Focus is on helping borrowers to develop a healthy relationship with their education (student success
solutions) and include:
• Increasing program completion rates;
• Decreasing program completion time; and
• Helping non-completers find a job.

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1) Form a Default Prevention Team, set measurable goals and develop or adopt a default prevention plan.
2) Organize a Default Prevention Task Force.
• The Default Prevention Task Force will drive your default prevention process:
→ Assess the resources you have available;
→ Team participants SHOULD be across campus;
→ Identify the purpose of the task force; and
→ Detail responsibilities of determining risk.

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Task Force members should include:
• Senior school official(s);
• Representatives from various offices (Enrollment
Management, Academics, Student Affairs, IT and
Institutional Advancement);
• Career Services; and
• Student representative (Student Government, Pan-
Hellenic Council).

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•
•
•
•
Study your student population.
→ Identify any common characteristics of your defaulters and non-defaults, and borrowers and non-borrowers.
Build on Early Intervention strategies already in existence.
Review all of your borrower education materials
Discuss your current strategies and determine what works and what may need some improvement
CONTINUED

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•
•
•
•
Work closely with your servicers.
Find out what type of services are available from your servicers.
Fine-tune your Loan Servicing procedures for the period while the borrower is at your school, in grace and repayment.
Have clear and precise procedures with a timeline of dates to take appropriate actions.

Organize Task Force
Establish
Objectives
Define Default
Risk
Outline Actions
Submit Plan
(optional for some schools)
Organize a Default Prevention
Task Force
 Assess resources for team
 Identify members
 Set Purpose
 Detail Responsibility
Set Objectives:
 Establish Objectives
 Identify steps needed to achieve goal
Define and Identify Risk
 Determine who is defaulting and why
 Analyze data
Submit Plan
FSA’s Default Prevention Team to assist schools with:
 Establishing their default prevention goals
 Developing, refining and reviewing your default prevention plan.
Outline Actions
 Specify actions needed to achieve your goal
 Ensure actions are measureable
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• ?% students received GED
• ?% first generation college students
• ?% receive financial aid
• ?% of Pell recipients have Zero EFC
• ?% students in a particular major
• ?% students place into developmental Math or English
• ?% are part-time students
• ?% retention Spring to Fall – ?% retention Fall to Fall
• ?% team sports players

Conduct Risk Analysis:
• You will need data! And someone to work the data!
→ Academic data: Program completion rates; retention rates; and data at the student level.
• Review combined NSLDS (default and delinquency) data and school data about defaulters and non-defaulters.
• Servicer data
Use data to create a picture of borrowers at-risk of default, e.g., who defaulted and why?
• ‘Who’ is not enough.
• ‘Why’ will require input of academic, student affairs and other professionals.
→ Knowing ‘why’ is necessary to create targeted, useful and measureable interventions.
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The responsibility of your DM Task Force:
• Determine the source of your default risk;
• Determine what steps your school will take to reduce default risk;
• Represent all parts of the institution (including management), which will contribute to risk reduction activities;
• Allocate school resources to default reduction activities; and
• Assess the effectiveness of default reduction activities over time.
→ Are they working?

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
Two ways to think about reducing default risk:
1) Assisting borrowers by enhancing their knowledge of loan responsibilities and processes and strengthening their relationship with their loan servicer; and
2) Assisting borrowers by enhancing educational and employment outcomes.
Examples:
→ Increase Student Success;
→ Reduce Program Completion Time;
→ Strengthen Relationship with Potential Employers; and
→ Career Placement for both Graduates and Non-Graduates.

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Create interventions based upon your data:
• Targeted vs. ‘best practices’ interventions;
• Most efforts are targeted at identified risk;
• Utilizing Intervention Opportunities;
• Utilizing ‘leverage’ where it exists; and
• Adding general best practices to targeted efforts .

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Specific Intervention Examples:
• Targeted Additional Loan Counseling;
• Targeted Existing Students;
• Success Efforts for At-Risk Borrowers;
• Review Policies and Procedures;
• Collect Detailed Contact Information;
• Financial Literacy Training;
• Tracking and Projections;
• Early Stage Delinquency Assistance;
• Late Stage Delinquency Assistance; and
• Promoting Loan Rehab for Defaulters.
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• Income
• Highest Income Earned
• Occupation
• Indebtedness
→ Other More Important Loans to Pay
• Marital Status, basic skill needs
• Number of Dependents
• Filing for Unemployment Insurance
• Dissatisfaction with Educational Program
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Reports for Data Accuracy:
•
•
Date Entered Repayment Report;
School Repayment Info Loan Detail;
•
•
School Cohort Default Rate History; and
Enrollment Reporting Summary.
Reports for Default Prevention:
• School Loan Portfolio Report;
•
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Date Entered Repayment Report;
Borrower Default Summary;
•
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Exit Counseling; and
Delinquent Borrower Report.

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School Loan Portfolio (SCHPR1)
• The School Portfolio Report provides details on borrowers and loans in your current loan portfolio.
• The report is based on loan repayment begin date.
• If your school has merged, previous school codes are included in the report.
• Report is available in Extract only.
Delinquent Borrower Data (DELQ01)
• Use the Delinquent Borrower Report (DELQ01) to assist with default prevention.
• Use Web Page under Aid tab “Delinquent Borrowers” for current up-to-date data.

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34 CFR § 668.217
Cohort default rate regulation requires that schools which have a cohort default rate equal to or greater than 30% must develop a default prevention plan that requires identifying at-risk borrowers.
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Default Prevention Plan
• Success is achieved when solid plans are developed and executed;
• A plan pulls together people and resources toward a common goal;
• The plan provides for consistency;
• ED Default Management sample plan in Dear Colleague Letter GEN-
05-14 issued September 2005 (Revised Plan out soon); and
• Revise and adjust you plan as needed to maximize your success.

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• What did your FY 09 and FY 10 rates look like and what will your FY 11 CDR look like?
→ If you have not looked at your rates, are you likely to hit 30% in
September 2014?
• Who are members of or a part of your DP team?
• What are the sources of your default risk?
• What ‘traditional’ strategies are included in your DP plan?
CONTINUED
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• Have you leveraged knowledge about default risk?
• What ‘student success-focused’ strategies are included in your DP plan? Have you leveraged knowledge about your default risk?
• Are your strategies measureable? How will you know if you are succeeding?
• Is your plan 34 CFR § 668.217 compliant?
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Federal Loan Servicers:
• Educate and inform borrowers regarding the tools and options available to assist in the management of their student loans;
• Offer multiple repayment options tailored to borrower preferences
(i.e. online payments, ACH, check, etc.);
• Provide self-service tools for borrowers and options to receive bills and/or correspondence electronically;
• Offer dedicated services to schools to help manage cohort default rates; and
• Comply with legislative regulatory requirements and provide unique services.

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During the grace period a loan servicer:
• Establishes a relationship with the borrower;
• Ensures the correct repayment status;
• Discusses the appropriate repayment plan;
• Promotes self-service through the web;
• Updates and enhances borrower contact information; and
• Discusses consolidation options.

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All servicers have toll free numbers for borrowers to contact (phone, fax, and e-mail).
• All servicers use IVR (integrated voice response) systems.
→ Allow self service-for those that prefer
→ Make payments over the phone
• All servicers includes option to speak to a representative.
• All servicers have a dedicated staff to assist borrowers.
• All servicers offer financial literacy (budgeting, credit tips, etc.).

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Websites designed to assist the borrower:
• Understand the various repayment plans and options; and
• Understanding Options (examples).
→ Deferments
→ Forbearances
→ Discharges
→ Forgiveness Programs
→ Loan Consolidation


All servicers work to gather feedback and opinions from schools and find ways to partner with schools on default prevention, via:
• Face to face meeting on school campuses;
• Financial aid conference attendance;
• Presentations at conferences;
• Proactive phone calls; and
• E-mail communications.
Partner with the servicers!
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Financial Awareness Counseling on StudentLoans.gov
was developed to:
• Provide a centralized, online source of financial literacy information for students;
• Assist borrowers in making informed postsecondary funding decisions;
• Provide schools with educational resources about federal student aid; and
• Support the government-wide efforts to improve financial capability in the U.S. through the Financial Literacy Education Commission.

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FAC: StudentLoans.gov
for 2013-2014
StudentLoans.gov has brought ALL FSA loan counseling tools together on one website:
• Entrance Counseling;
→ Subsidized & Unsubsidized and GradPLUS
• Exit Counseling; and
→ NSLDS will continue to provide detailed Exit Counseling reports and you’ll continue to obtain demographic and reference information from that website as you do today
• Financial Awareness Counseling.

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FAC: StudentLoans.gov
for 2013-2014
New features for signed-in students:
• New landing page with guidance to help the student select the right type of counseling;
• Select schools to notify from a list of associated schools;
• Add new schools to notify;
• Select preferred repayment plan in Exit Counseling; and
• Send notifications of previously completed counseling sessions.
→ Entrance Counseling
→ Financial Awareness Counseling

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FAC: StudentLoans.gov for 2013-2014
StudentLoans.gov
has added a new Repayment Estimator to the website.
•
• The repayment estimator is on the “My Preferences” screen
An authenticated users will see loan data from NSLDS, eligibility of each loan for a particular repayment plan, and estimate the payment for a particular plan based on several factors including:
→ Loan type;
→ Loan balance;
→ Income;
→ Family size; and
→ Where you live.

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FAC: StudentLoans.gov
for 2013-2014

FAC: StudentLoans.gov
for 2013-2014
New entrance and exit counseling response functionality on ‘Options’ screen in COD.
Entrance Counseling
• Participation
• Response frequency
(Daily or On-Demand)
Exit & Financial
Awareness Counseling
• Response frequency
(Daily or On-Demand)
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Cohort Default Rate
• The Cohort Default Rate Guide
→ http://www.ifap.ed.gov/drmaterials/finalcdrg.html
Delinquency and Default Management
• Electronic Announcement – Delinquency Prevention Activities
→ http://www.ifap.ed.gov/eannouncements/060310LoanServicingyInfoDelinqPrevent
Act.html
General Servicing Information
• Electronic Announcement (EA) – Loan Servicing Information
→ http://www.ifap.ed.gov/eannouncements/032610LoanServicingInfoFedOwn.html
Assessments
• FSA Assessments
→ http://ifap.ed.gov/qamodule/DefaultManagement/DefaultManagement.html

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Operations Performance Management Service Group
CDR calculations and data challenges
Main Line: 202-377-4258
Hotline: 202-377-4259
Email: http://fsa.schools.default.management@ed.gov
Web: http://ifap.ed.gov/DefaultManagement/DefaultManagement.html

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Lenders and Guarantors
• Counseling Resources
Jump$tart Coalition For Personal Financial Literacy
• http://www.jumpstart.org/
FDIC Financial Education Literacy
• http://www.fdic.gov/consumers/consumer/moneysmart/index.html
Mapping Your Future
• http://www.mapping-your-future.org
National Endowment for Financial Education
• http://www.nefe.org/tabid/183/default.aspx

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WHAT DOES THE FUTURE HOLD FOR OUR STUDENTS?

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1) Working with the New Default Prevention Team
2) Identifying Default Risks
3) Default Prevention Plans

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Larry Eadie
Larry.Eadie@ed.gov
ET Winzer
Etienna.Winzer@ed.gov
We appreciate your feedback and comments!
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