Trends and Issues

Three ways to help borrowers and lower your default rate

A low cohort default rate (CDR) is good for the federal student loan program, not to mention schools, lenders, and taxpayers. You still have an opportunity during the last quarter of FY 2008 to positively affect your institution's CDR. With a changing economy, many borrowers may find themselves behind on all types of accounts, including student loans. Some of them may not know what is available to help with student loan payments. As a school, you can offer some aid.

Making a difference in default aversion
Looking for ways to make the most of the last quarter in terms of default aversion? Consider one or more of these strategies.

• Start a phone campaign to borrowers that are 201 or more days past due on their accounts. These are the students most likely to affect your FY 2007 CDR.
• Focus on borrowers with slightly shorter delinquencies. Reach out to them via e-mail or by phone with a "we can help" campaign — a message of information about their options and an invitation to help by phone or Web.
• Do a quick self-study to identify any common factors among your later stage delinquencies. Determine if there is a new approach that you can take to these particular borrowers. If financial problems are the issue, you may be able to suggest various payment alternatives. You might draft phone scripts or e-mails that focus on borrowers with specific circumstances.

For help
TG offers a variety of support for your default aversion efforts, including call centers, electronic and print communications, and training on default management for your financial aid office staff.

To learn more, contact your account executive at (800) 252-9743. Or you can direct questions to Rett Anderton or Joe Braxton, TG's default aversion consultants. Rett Anderton may be reached at (800) 252-9743, ext. 4765, or by sending an e-mail message to rett.anderton@tgslc.org. Joe Braxton may be reached at (800) 252-9743, ext. 4696, or by sending an e-mail message to joe.braxton@tgslc.org.

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Question of the week

Q.: Is an incarcerated student eligible for an economic hardship deferment?

A.: An incarcerated borrower may be eligible for an economic hardship deferment. According to the Common Manual Subsection 11.4.A:

"A borrower who is unemployed, incarcerated, disabled, or on a temporary unpaid leave of absence from work may qualify for an economic hardship deferment if he/she provides the lender with documentation of his/her income. Any borrower who does not have income when applying for an economic hardship deferment must provide a self-certifying statement, either on the deferment form or in a separate statement, indicating that he/she has no income."

The Common Manual Subsection 11.4.C notes the length of the deferment:

"The deferment begins on the date the condition entitling the borrower to the deferment first existed, as determined by the lender. The deferment ends on the date the condition establishing the borrower's eligibility for the deferment ends. This deferment may be granted for periods of up to 1 year at a time and may be renewed for a total that, collectively, do not exceed 3 years."

Do you have a question?
If you have a question that needs an answer, feel free to Ask TG™. Ask TG is TG's online query tool for borrowers, schools, and lenders. It includes a database of frequently asked questions about financial aid, student loan processing, and TG's products and services. To submit a question to Ask TG, visit tgslc.custhelp.com.

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