Team Helps Resolve Repayment Problems
Editor’s Note: The following is a feature from the USA Funds® 2008 annual report. USA Funds Education Access Report is highlighting those featured in the annual report to show the key roles that USA Funds plays in helping families prepare and pay for, and complete postsecondary education. To access the full report online, you’ll need Adobe Reader.
Many student loan borrowers who fall behind in their payments are unaware that they have options that can help them get back on track. For the default prevention specialists who counsel these borrowers on USA Funds’ behalf, the goal is to help them understand those options and determine which route for loan payment relief is best for them.
“We here to help in any way we can,” says Melissa Hughes, a default prevention specialist working for Student Assistance Corp.
Hughes is part of a team of 250 SAC default prevention professionals whose work USA Funds supports in an effort to prevent education loan defaults.
SAC staff members in 2008 successfully averted default on nearly 93 percent of the seriously past-due education loans on which they provided assistance, helping to prevent more than $20 billion in defaults on more than 1.3 million federal student loans.
These efforts saved borrowers $6.8 billion in additional interest and collection costs — and saved U.S. taxpayers $19 billion in potential loan default costs.
Brian Renfro, an SAC senior manager, says that the options available to borrowers who encounter repayment difficulties in the Federal Family Education Loan Program help drive his staff’s success. But just as important in preventing default, he says, is the default prevention professionals’ dedication to helping those who need it.
“Every day they face scenarios they haven’t faced before,” Renfro says of the default prevention specialists. “But for our staff, coming up with customized solutions to achieve long-term repayment success and prevent default is the big picture.”
When an SAC default prevention specialist works with a borrower, the specialist first determines whether the borrower can make a payment to put the account back in good standing, or if a different repayment plan would make payments more reasonable for that borrower.
The specialist may examine the possibility of a deferment, which allows a borrower who meets certain qualifications to defer loan payments.
Then, if the SAC staff member and borrower determine that deferment is not a viable option, they may discuss the option of forbearance. Forbearance permits a borrower to reduce or postpone payments or extend the time for making payments, at the discretion of the lender.
Throughout the process, the default prevention specialist works with the lender to ensure that the borrower has the information and paperwork required to pursue any option for which the borrower might qualify.
Saving from default
The result often is that borrowers who were frustrated about their student loans are relieved to have a resolution that keeps them from slipping into default, say default prevention professionals.
“They’re so happy to have one less thing to worry about,” says Kelly Malott, a default prevention specialist. “People take out student loans to go to school and be successful, but if you go into default and ruin your credit, you can’t have all the success that you want. I like being able to help people get back on their feet.”
Brenda Pokorny, another SAC default prevention specialist, echoes Malott’s thoughts about the appeal of their work. “Helping borrowers out of a bad situation makes our day,” she says. “That’s a perk of the job.”
Hughes, Renfro, Malott and Pokorny are based at the Muncie, Ind., facility of SAC’s parent company, Sallie Mae. All have been with the organization about a year and a half.
Some 175 default prevention specialists in the 54,000 square-foot facility dedicate their work to counseling borrowers of USA Funds-guaranteed loans. The remaining SAC default prevention specialists who work on USA Funds’ behalf are based in Indianapolis.
Opened in 2006, the Muncie facility features an environment that is free from cubicle walls and places management team members on the floor with default prevention specialists. Hughes says the layout is perfect for encouraging staff members to work together to find solutions for borrowers.
Among the other innovative approaches to successful default prevention are the use of the latest technology and the extensive training of staff. Such efforts help SAC staff members locate and assist borrowers, says Kevin Tharp, USA Funds manager of default prevention and debt management.
“USA Funds provides the financial incentive for SAC to perform at the highest level possible,” Tharp says. “And SAC puts a great deal of effort into finding the right solution for borrowers.”
Offering many resources
The work of SAC’s default prevention professionals is just one resource USA Funds supports to counsel borrowers about their student loans. USA Funds also offers USA Funds Loan Counselor®, a suite of online products that helps schools fulfill federal requirements for loan counseling and simplifies entrance and exit counseling.
Nationwide 157 schools offer entrance counseling for their graduate and professional students through USA Funds Grad GuideSM, a USA Funds Loan Counselor component that USA Funds introduced in 2008.
USA Funds Stafford Loan GuideSM, which provides entrance counseling for undergraduate students, is in place at 403 schools. USA Funds Student Loan Transition GuideSM offers undergraduate exit counseling at 466 schools. USA Funds also recently introduced the exit counseling version of USA Funds Grad Guide.
Another USA Funds resource assists borrowers in resolving their payment problems. The Web site /www.loanpaymentsolutions.org permits borrowers who are behind on payments on USA Funds-guaranteed loans or whose loans are in default to view their personal account information online in a secure environment.
Visitors to the site also can learn more about how to resolve their payment problems.
The tool recorded nearly 45,000 logins in 2008.
Additionally, USA Funds produces a variety of materials to assist students and their families throughout the student loan process, including a number of items that address repayment options. In 2008 USA Funds distributed nearly 1.4 million of these publications, with some in Spanish.
“Our primary responsibility is helping students and borrowers,” Tharp says, “so it’s important that we provide resources that protect them from the pitfalls of loan delinquency and default.”