Government Approach and Instruction Obligation Administration

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Condition of Industry - New World of Student Lending - Panel. Paul C. Combe President and ... FICO ratings impact qualification for loft/vocation ...

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Government 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

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A Growing Social Issue ASA Confidential and Proprietary Information 2

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Trends in Student Debt 49% of Bachelor's Degree beneficiaries had obligation in 1992-1993; expanded to 65% in 1999-2000 Choy % Li , 2005 In 2007-2008 66% of Bachelor's Degree beneficiaries graduated with understudy advance debt: Average obligation - $23,186 Cumulative obligation is developing at 5.6% every year or $1139 Of Bachelor's Degree beneficiaries who connected for government help and had AGI under $25,000, 86.8% had normal obligation of $24,951 More Pell Grant beneficiaries graduate with understudy advances than non beneficiaries Source: Growth In Cumulative Education Debt at College Graduation by Mark Kantrowitz (July, 2009) (FinAid.org) ASA Confidential and Proprietary Information 3

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Consequences of Default Ruined Credit Record: Unable to buy home Unable to acquire auto advance Credit scores impact qualification for loft/work Wage garnishment Tax discounts counterbalance No extra money related guide ASA Confidential and Proprietary Information 4

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We know what number of default Cohort Default Rate 2007-2009 6.7% Trigger Rate 2007 2.05% ED Cumulative Default Rate (10 years) 13% We don't know what number of borrowers have genuine inconvenience, however don't default No elected information gathered ASA's gauge, in light of Trigger Rate Data is that no less than 25% and 30% of all borrowers are reprobate over 90 days every year ASA Confidential and Proprietary Information 5

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What are the ramifications of developing obligation for universities? Not just about enlistment Alumni reimbursement and "brand tail" Although gifts developed by 18% in 2005, "The rate of graduated class making blessings declined" Kaplan 2007:3 ASA Study with Miami University of Ohio "Understudy Debt and Alumni Giving" (ASA's cover understudy obligation and graduated class giving is accessible in the "Squeeze Room" at www.amsa.com. Tap on "Reports & Studies.") ASA Confidential and Proprietary Information 6

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Giving Effected by Loans Alumni who graduated with no school advances were somewhat more than twice as liable to give (20.9%) than were the individuals who graduated with obligation reimbursement duty (9.8% ). (MWU Sample) ASA Confidential and Proprietary Information 7

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Total Loan Debt: High versus Low Debt Graduates with low TOTAL advances (< $20,000) will probably add to their place of graduation (34.0%) than those with higher TOTAL credits (18.2%). (ASA Sample) ASA Confidential and Proprietary Information 8

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Monthly Debt Repayment: None versus High Those without obligation duty were just about four times more inclined to give cash than those with high obligation reimbursement (>$175,000); 23.7% when contrasted with 6.4%. (MWU Sample) ASA Confidential and Proprietary Information 9

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Sense of Debt Burden Students who "felt overburdened" by understudy credit obligation were less inclined to contribute than the individuals who did not feel overburdened (2.5% versus 16%). (MWU Sample) ASA Confidential and Proprietary Information 10

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Sense of Debt Hardship Alumni who concurred with the announcement "My advance reimbursements cause me more hardship than I expected" were more averse to add to their place of graduation (4.4% versus 15.2% contributed). (MWU) ASA Confidential and Proprietary Information 11

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Debt Management Service as a Borrower Right America has picked obligation as the essential strategy for financing access to advanced education You get what you measure Access doesn't end until the credit is reimbursed If government arrangement ventures into the red, it is an elected duty to give help to help them escape obligation Education Debt Management = Entitlement ASA Confidential and Proprietary Information 12

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What is Education Debt Management? Viable training obligation administration is not simply due perseverance with an endorsed measure of letters and telephone calls Borrower based for every government advance, wellspring of capital is insignificant It's about utilizing elected school credits as "open to instruction minutes": Debt Management is a "physical game" Use continuum of intercession/instruction movement (proactive and responsive) to target, draw in, and affect the borrower's monetary wellbeing It is proactive and centered around getting the right data to the right borrower at the perfect time Moments of Truth It is individualized and customized Uses CRM devices ASA Confidential and Proprietary Information 13

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(800) 999-9080 (617) 728-4670 F A X (800) 999-0923 T D www.amsa.com American Student Assistance ® 100 Cambridge Street, Suite 1600 Boston, MA 02114

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