Student Lending Analytics, LLC

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1 Student Lending Analytics Flash Survey: Past Due Balances and CCRA July 6, 2008 This presentation does not constitute formal policy or legal advice and should not be relied upon as such. Slide 1

2 SLA Survey: Past Due Balances Background Situation The College Cost Reduction Act contains a provision increasing past due balances that can be repaid from current year aid to $200, however it also eliminated a broad exception which had been in place earlier. Survey Goals Calibrate the level of concern felt by financial aid administrators Identify strategies being adopted by aid administrators to address this issue Slide 2

3 SLA Survey: Past Due Balances Methodology ed flash survey to over 2,500 schools on July 1st with due date of July 2, In addition to demographical questions, survey had following questions Were you aware of this provision in the College Cost Reduction Act, which increases the past due balances which can be paid with current year funding from $100 to $200 while eliminating the exceptions? How concerned are you about this change in the regulations? How many students at your institution do you estimate will be impacted by this change in the regulation? What strategies are you considering to address this issue? Responses were normalized for following reasons Several respondents provided just demographical information Several schools provided multiple responses; only one response was analyzed Overall, responses from financial aid administrators at 159 schools were included in the analysis Slide 3

4 SLA Survey: Past Due Balances Insights 82.4% of financial aid administrators surveyed indicated that they were aware of this past due balances change in CCRA. 51.6% of survey participants expressed concern about this change 20.1% answered that they were very concerned 31.5% indicated being somewhat concerned In terms of student impact, while 57.2% indicated less than 100 students would be impacted at their institution, 5. reported that over 1,000 would be affected by it Among school types, administrators at 4-year schools showed the greatest degree of concern 60. of respondents at 4-year public schools indicated some degree of concern 53. of respondents at 4-year private schools indicated concern 37.2% of respondents at 2-year public schools indicated concern Aid administrators provided strategies for dealing with the funding, communications, systems and procedural issues relating to this topic. Slide 4

5 SLA Survey: Past Due Balances Profile of Survey Participants School Type School Ownership year private 4-year public 2-year public Proprietary Other Public Private Other School Size School Region South West Midwest Northeast or fewer 501-2,500 2,501-7,500 7,501-15,000 More than 15K Slide 5

6 SLA Survey: Past Due Balances Awareness of Change in Past Due Balance Regs. School Type School Ownership Proprietary 4-year private 4-year public 2-year public Private Public School Region School Size Midwest South West Northeast or fewer 501-2,500 2,501-7,500 7,501-15,000 More than 15K Question #1: Were you aware of this provision in the College Cost Reduction Act, which increases the past due balances which can be paid with current year funding from $100 to $200 while eliminating the exceptions? Slide 6

7 Percentage of Total SLA Survey: Past Due Balances Concern over Change in Past Due Balance Policy % 1 18% 16% 3 31% 29% 47% 31% 38% 25% % 27% 7% 25% 38% 38% Not concerned at all Not too concerned Somewhat concerned Very concerned Overall 4-year public 4-year private 2-year public Proprietary Question #2: How concerned are you about this change in the regulations? Slide 7

8 SLA Survey: Past Due Balances Level of Concern By School Type Overall 4-Year Private Very 31% 31% Somewhat Not Too 17% No Concern % 25% Very Somewhat 29% Not Too 18% No Concern 4-Year Public 2-Year Public % Very 38% Somewhat 3 Not Too 1 No Concern % Very 3 Somewhat 47% Not Too 16% No Concern Question #2: How concerned are you about this change in the regulations? Slide 8

9 SLA Survey: Past Due Balances Number of Students Impacted Overall 4-Year Private % None 47% Less than % 8% 4% 5% Over 1, % None 43% Less than % 6% 4% 2% Over 1,000 4-Year Public 2-Year Public % None 46% Less than % 12% 2% 8% Over 1, % None 56% Less than % 5% 2% 2% Over 1,000 Question #3: How many students at your institution do you estimate will be impacted by this change in the regulation? Slide 9

10 Strategies to Address Past Due Payments Funding Strategies Utilizing our in-house monthly payment plans to a greater extent to assist students in meeting their payment obligations (large, 4-year public). Using state or institutional funding to cover the outstanding balance to eligible students (mid-size, 4-year public). Looking at alternative loans that pay previous balances (large, 2-year public). We suspect that quite a few students will be forced to take out private loans to pay these past balances (mid-size, 4-year private). The Bursar's Office will review students issues on a case by case basis-- and make allowances if they have nonfederal resources that could be used in these situations (large, 4-year public). Talking to our general counsel to see what we can do to benefit students (mid-size, 4-year private). Slide 10

11 Strategies to Address Past Due Payments Student Communications We are educating the students to let them know that they can not forward their balances from year to year (mid-size, 4-year public). Contacting students by and reviewing the refund process for next fall (mid-size, 4-year public). Running report and contacting these student ASAP for one on one advisement (mid-size, 4-year public). Working with individual students to make repayments plans with us (voluntary) when in excess of $200 max (mid-size, 2-year public). Slide 11

12 Strategies to Address Past Due Payments Procedural Issues Students who owe the college for previous semesters will have a hold put on their records until paid (mid-size, 2-year public). Verifying the source of any financial aid beyond current year costs; if the source is federal, the excess must be refunded to the student and we will contact the student about his/her prior balance (small, 4- year private). This is just a thought but it needs to be discussed further. Pay all the student's current charges and issue them their credit check and they turn around a pay on their account as a payment. Not sure yet if we will have the student endorse the check back to us or let them cash it and then pay on their account (small, 4-year private). Also thinking about a debit card kind of disbursement of excess funds (large, proprietary) Slide 12

13 Strategies to Address Past Due Payments Systems issues We are contacting our software company to see how to change the process to only pay current charges (mid-size, 4 year public college). We have to make expensive modifications to our existing technology (large, 4-year public). We've rearranged the order in which aid and payments hit the students' accounts so that all federal aid goes on first and any nonfederal aid and payments hit after federal aid (mid-size, 4 year private college). Our billing module cannot identify past balances from one semester to the next, rather, it is a cumulative bill. It is virtually impossible to find such students without resulting chaos in our operations (midsize, 4-year public). Slide 13

14 Thank You Thank you again for your participation! Please contact Tim Ranzetta if you have any additional comments or questions regarding this survey Phone: X10 Look for more upcoming SLA Flash Surveys in the future including a follow-up to the alternative loan survey during the peak borrowing season For more information on Student Lending Analytics, proceed to the final two slides Slide 14

15 Student Lending Analytics RFI + Services Outsourced RFI (Request for Information) services for our clients Clients identify key criteria and weightings SLA develops lengthy list of lenders to invite to process ( cast wide net ) SLA develops customized RFI SLA analyzes results from lenders SLA summarizes results so clients can select lenders Key elements of process Time-tested, thorough RFI document Financial modeling of borrower benefits to provide apples to apples comparison Probability analysis Net Present Value calculations Proprietary surveys to measure lender customer service in objective way To Financial Aid offices To Student borrowers Web site information and activities Slide 15

16 Student Lending Analytics Research Services One-stop research site ( for assessing trends in student loan marketplace Flash Surveys (Thanks to all who have participated!) FFEL vs. Direct Lending Lender Selection Practices Alternative Loans Past Due Amounts and CCRA Blog ( Market Buzz Regulatory Analysis Monthly newsletter May Lender Selection Disclosures June Alternative Loans Webinars April Lessons Learned in Trenches of Lender Selection Process White papers Increased Stafford Loan Limits and Implementation Strategies Slide 16