NCHELP 2002 Debt Management Conference

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NCHELP 2002Debt Management Conference

• The 3 Ps of Collections

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Pot of Gold Game!
7. A Banshee is a
8. The shamrock symbolizes what?
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Pot of Gold Game!
9. Where was St. Patrick born?
10. Which American city was the first to
officially celebrate St. Patricks Day?
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NCHELP 2002Debt Management Conference

• NDNH Process

Presented by Phillip Cervin TGSLC
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Agenda

• Overview
• Authority
• Data Elements/Requirements
• Bumps
• Strategies
• QAs

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Authority To Establish

• Section 303 (a) Section 453(j) of the Social
  Security Act (42U.S.C. 653(j) as amended, P.L.
  106-113, (11/29/1999) authorizes a COMPUTER MATCH
  between ED and HHS/OCSE against the files in the
  NDNH, for the purpose of the collection debts
  owed by individuals whose annualized wage level
  exceeds 16,000.
• Only for the purpose of collection of debts owed
  on defaulted student loans, or grant
  overpayments, made under Title IV of the HEA of
  1965.

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WHAT IS IN THE NDNH DATABASE?
The NDNH has three components
NEW HIRE (W4)
QUARTERLY WAGE (QW)
UNEMPLOYMENT INSURANCE (UI)
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What Data Do We Get?

• New Hire (W4) Database
• Employee SSN
• Employee address
• Quarterly Wage (QW) Database
• Employee wage amount
• Employer name
• Employer address

NDNH DATA
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Requirements

• Agree to sign safeguard disclosure agreement
  (NCHELP website)
• Develop systems to follow prescribed record
  layouts (NCHELP website)
• Prepare send a match tape 2-weeks prior to
  match date
• Provide contact name address for tape receipt
• Send report on amount collected from submissions.

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Bumps In The Road
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Types of Bumps

• Returned Transmittal Sheet
• Sometimes in quarterly wage, amounts are more
  than a quarter (may include multiple quarters).
• Can receive multiple employers in data.
• No employer phone numbers
• Verify Employer number, zip codes(states and zip
  codes are misaligned)
• Consistency of data, I.e. address information...
• Header and trailer records (do not match).

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Strategies

• Which accounts to send?
• How many accounts to send?
• Do you send every quarter?
• Run reports and evaluate data?
• Call other GAs and SFA.

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Current Users

• ED/SFA
• NEW JERSEY
• LOUISIANA
• WASHINGTON
• MONTANA

• MAINE
• USA FUNDS
• IOWA
• SOUTH DAKOTA
• MASSACHUETTS(ASA)

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Current Users Contd

• FLORIDA
• CONNECTICUT
• MICHIGAN
• NEBRASKA
• NEW HAMPSHIRE
• SOUTH CAROLINA

• NEW YORK
• KENTUCKY
• TEXAS
• OKLAHOMA
• PHEAA (PA)

Need Remaining GAs on Band Wagon...
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Most Frequently Asked Questions

• Q. Is there a cost for team participants?
• A. There is a cost to ED. A shared cost may be
  passed on to the GA in the future.
• Q. Can NDNH data be used for purposes of default
  aversion?
• A.. No. Data is strictly to be used for
  collecting defaulted student loans?
• Q. Is the Safeguarding Disclosure agreement
  absolutely required?
• A. Yes.

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Most Frequently Asked Questions, contd

• Q. Is it necessary to follow the file/record
  layouts?
• A. Yes.
• Q. What programming will we need to do?
• A. It depends on your individual systems.
• Q. What data will the match tape include?
• A. Quarterly wage, and new hire data on any
  borrower who matched against the NDNH database,
  and who passed the salary edit.
• Q. What happens to the original tape?
• A. It should be sent back to the agency

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Most Frequently Asked Questions, contd

• Q. Should we use a transmittal when sending
  tapes?
• A. YES. Please include on it the address to
  where tapes should be returned.
• Q. Does the GA have to track the success of
  accounts that have received NDNH data?
• A. Yes.
• Q. How is this to be done if no NDNH identifiers
  are allowed on the account.
• A. No visible identifiers are allowed. Program
  behind the scenes.

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NDNH Contacts
Marian Currie, Management Analyst (202)
377-3212 Marian_Currie_at_ed.gov Anita Williams,
Systems Analyst [phone] Anita_Williams_at_ed.g
ov Phillip Cervin, TGSLC (512)
219-4649 Phillip.Cervin_at_tgslc.org
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Future Submissions

• April 2002
• July 2002
• October 2002
• Data from GAs is usually submitted a week and
  a half prior to the quarter end, I.e. last week
  and a half of March 2002March 20-27

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Thank You and Enjoy your Texas stay
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NCHELP 2002Debt Management Conference

• Administrative Wage Garnishment Hearings

Presented by Doug Hendrickson - Educational
Credit Management Corporation
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Administrative Wage Garnishment Hearings
Performed by ECMC

• ECMC began offering this service to guaranty
  agencies/collection agencies in June 1998 and has
  received 6,339 AWG hearing requests.

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Administrative Wage GarnishmentStatutory/Regulato
ry Authority

• ECMC hearing officers act as an independent third
  party hearing entity adhering strictly to the
  statutory/regulatory authority governing this
  process as stated in Public Law 102-164 20
  U.S.C. 1095a and 34 CFR 682.410(b)(10).

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AWG Hearings Scope of Authority of Hearing
Official

• The hearing officials decision is limited in
  scope to a determination of whether, in light of
  the borrowers objection(s) the guaranty agency
  is entitled to issue an order to administratively
  garnish wages.

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AWG Hearings Scope of Authority of Hearing
Official

• The Final Decision is not a ruling on the
  validity of the debt.
• Appeals are handled directly through the guaranty
  agency.

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AWG Hearings Regulatory/Statutory Requirements

• If a borrower requests a hearing, the hearing
  must be granted unless the agency decides not to
  pursue the administrative wage garnishment.

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AWG Hearings Regulatory/Statutory Requirements

• A Final Decision must be rendered within 60
  days from an agencys receipt of a borrowers
  request for hearing.

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Administrative Wage Garnishment Hearings
Performed by ECMC

• Common Reasons for Hearings
• Extreme financial hardship
• Debtor repaid some or all of loan
• School closed while borrower was enrolled

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Administrative Wage Garnishment Hearings
Performed by ECMC

• Common Reasons for Hearings
• No high school diploma or GED when enrolled
• Involuntary separation from employment

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Administrative Wage Garnishment Hearings
Performed by ECMC

• Cumulative Breakdown of Hearing Requests
  Resolved
• Hearings Dismissed Prior to Hearing Date
  4.76
• AWG Approved with no Hardship
  76.84
• Hardship 2.97
• AWG Denied 15.43

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Most Common AWG HearingDenial Reasons

• Incorrect application for discharge form or no
  form sent to borrower once request for hearing is
  received.
• Application for discharge or financial statement
  form sent to wrong borrower address.

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Most Common AWG HearingDenial Reasons

• Agency not reviewing all written correspondence
  and documentation provided by borrower and not
  addressing all issues raised.

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Suggested Statutory/Regulatory Changes to AWG
Hearings Process

• Allow hearings involving unresolved application
  for discharge issues to be continued beyond 60
  days. This would prevent denials for pending
  issues and eliminate the need for agencies to
  restart the process after the resolution of the
  application for discharge.

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Suggested Statutory/Regulatory Changes to AWG
Hearings Process

• Instead of allowing the borrower 20 days (15 days
  plus 5 assumed mailing days) to respond to the
  Notice of Intent to Withhold Wages, allow 30
  days. This would be consistent with the 30 days
  the agency must wait before issuing the Order of
  Withholding From Earnings.

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Administrative Wage Garnishmentas aCollection
Tool
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Administrative Wage Garnishment as a Collection
Tool

• Administrative wage garnishment (AWG) is the most
  effective form of collection when attempting to
  recover funds from defaulted student loan
  borrowers who are unwilling to pay.

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Administrative Wage Garnishment as a Collection
Tool

• Administrative wage garnishment (AWG) is a
  national wage garnishment process. It is not
  limited to state boundaries and can be
  administered in states which do not allow state
  wage garnishment.

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Administrative Wage Garnishment as a Collection
Tool

• Unlike state wage garnishments, an AWG is in
  effect as long as there is an outstanding balance
  on the defaulted student loan(s) and the borrower
  remains employed at the employer of record at the
  time the garnishment is issued.

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Questions???
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NCHELP 2002Debt Management Conference

• Using Loan Rehabilitation to Go for the Gold!

Presented by David M. Burton OSI Education
Services, Inc.
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Part 1 Why Emphasize Loan Rehabilitation?
Using Loan Rehabilitation to Go for the Gold!
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Part 1 Why Emphasize Loan Rehabilitation?
Using Loan Rehabilitation to Go for the Gold!
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Part 1 Why Emphasize Loan Rehabilitation?
Using Loan Rehabilitation to Go for the Gold!
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Part 2 Rehabilitation Impact Factors to
Consider
Using Loan Rehabilitation to Go for the Gold!
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Part 2 Rehabilitation Impact Factors to
Consider
Using Loan Rehabilitation to Go for the Gold!
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Part 2 Rehabilitation Impact Factors to
Consider
Using Loan Rehabilitation to Go for the Gold!
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Part 2 Rehabilitation Impact Factors to
Consider
Using Loan Rehabilitation to Go for the Gold!
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Part 2 Rehabilitation Impact Factors to
Consider
Using Loan Rehabilitation to Go for the Gold!
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Part 2 Rehabilitation Impact Factors to
Consider
Using Loan Rehabilitation to Go for the Gold!
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Part 3 Rehabilitation PerspectiveFactors to
Optimize Portfolio Retention
Using Loan Rehabilitation to Go for the Gold!
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Part 3 Rehabilitation Perspective Factors to
Optimize Portfolio Retention
Using Loan Rehabilitation to Go for the Gold!
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NCHELP 2002Debt Management Conference

• Recovery Rate Formula

Presented by Maree Fox- HESC
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• ED 1189 and ED 1130
• Now Replaced by
• Forms 2000

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ED 1130
Accounts Scheduled or Rescheduled (denominator)

C-11 Not Delinquent
C-12 1-30 Days
C-13 31-60 Days
C-14 61-90 Days
C-15 91-120 Days
C-16 121-180 Days
C-17 181-365 Days
C-18 1 Year, 1 Day- 2 Years
C-19 2 Years, 1 Day- 3
Years C-20
Over 3 Years
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FORMS 2000(denominator)
MR-32 Ending Balance on Defaulted Loans MR-33
Not Delinquent MR-34 1-90 Days MR-35 91-180
Days MR-36 181-365 Days MR-37 1-2
Years MR-38 2-6 Years MR-39 6-10
Years MR-40 Over 10 Years
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ED 1130 -vs- Forms 2000

• C-11 Not Delinquent
• C-12 1-30 Days
• C-13 31-60 Days
• C-14 61-90 Days
• C-15 91-120 Days
• C-16 121-180 Days
• C-17 181-365 Days
• C-18 1 Year,1 Day- 2 Years
• C-19 2 Years, 1 Day-3 Years
• C-20 Over 3 Years

• MR-32 Ending Balance on Defaulted Loans
• MR-33 Not Delinquent
• MR-34 1-90 Days
• MR-35 91-180 Days
• MR-36 181-365 Days
• MR-37 1-2 Years
• MR-38 2-6 Years
• MR-39 6-10 Years
• MR-40 Over 10 Years

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ED 1130Dollars Collected Principal , All
Interest Fees(Numerator)
A-25 Total Collected by Guaranty Agency
A-26 Total Collected By Agents of the
Guaranty Agency A-27 Total Collected Through
IRS Offsets
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FORMS 2000 (numerator)
MR-10 Rehabilitated Loans-Amount Due from
Guarantor MR-10-A Rehabilitated Loans- GA
Retention MR-10-A Rehabilitated Loans Federal
Share Interest MR-10-A Rehabilitated Loans
Federal Share Other MR-11-A FFLEP
Consolidations Payoff MR-11-B FLEP
Consolidations GA Retention MR-12-A GA
Administrative Wage Garnishment MR-13-A
Default Collections MR-14 Bankruptcy
Collections MR-27 Default FFLEP Loans
Consolidated by Direct Loan Program MR-4 TOP
Overpayment MR-17 Treasury Offset
Program MR-19 Treasury Offset Reversals
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Recovery Rate Formula
(6 2x) (6 2x) Y X 36 24x
Y X 36 24 Y X
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Recovery Rate Formula
Recovery Rate Formula Total Collections

Federal Receivables
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NCHELP 2002Debt Management Conference

• Future Collections Outlook

Presented by Gary Hopkins FSA Collections U.S.
Department of Education
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Overview

• Prior Years
• FY01 Data
• FY02 Forecasts
• Default Collections Outlook
• Summary

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Prior Years

• FY97 - 2.0 Billion
• FY98 - 2.7 Billion
• FY99 - 3.7 Billion
• FY00 - 4.8 Billion
• FY01 - 5.1 Billion
• (7.2 Billion in Consolidation since FY96)

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FY2001 Totals

• GA - 3.7 Billion
• ED - 1.4 Billion
• Combined - 5.1 Billion
• - 2.65 Billion in Loan Consolidation

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FY2002 Forecasts

• GA - 3.7 Billion
• ED - 1.3 Billion
• Combined - 5.0 Billion
• - 2.5 Billion in Loan Consolidation

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Changing Portfolio Mix

• FY01 GA - 16.9 Billion
• FY02 GA - 15.3 Billion
• FY01 ED - 11.8 Billion
• FY02 ED - 12.7 Billion

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Growth of Direct Loans

• FY00 - 27 Billion Defaulted Loans
• FFEL - 26 Billion (97)
• FDSL - .02 Billion (1)
• FY02 - 29 Billion Defaulted Loans
• FFEL - 24 Billion (84)
• FDSL - 3.5 Billion (12)

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Growth In Defaults

• More Loans Higher Loan Limits
• Loans In-Repayment Barely Reduce Size of
  Portfolio
• Greater Use of Loan Consolidation for Default
  Prevention Collection
• More Focus on Loan Rehabilitation

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Growth In Default Collections

• More Loans in Defaults Higher Balances
• Better Collection Tools
• Increased Focus on Collections
• Improving Economy

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Summary

• Drastically Changing Portfolio Mix
• Growth in Default Portfolio
• Growth in Default Recoveries

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