New Regulations – Rehabilitation, AWG and PLUS Adverse Credit PowerPoint Presentation, PPT - DocSlides

Download test | 2018-07-11 | General Collection Agency Perspective. Lynn Heineman. Senior Vice President. Account Control Technology, Inc.. Pre & Post 7/1 Regulation Changes. # of activations (accounts into billing) have stayed status quo on ED, increased in guarantor side . ID: 663626

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Slide1

New Regulations – Rehabilitation, AWG and PLUS Adverse Credit

Slide2

Collection Agency Perspective

Lynn Heineman

Senior Vice President

Account Control Technology, Inc.

Slide3

Pre & Post 7/1 Regulation Changes

# of activations (accounts into billing) have stayed status quo on ED, increased in guarantor side

Turn Rate of Activations into Rehabs has decreased since 7/1 regulation changes

Customer and

Activations

Activations that Became Rehabs

Sum of Rate

Activation Month

Client A

892

461

51.68%

7/2014

225

82

36.44%

8/2014

352

194

55.11%

9/2014

315

185

58.73%

Client B

688

369

53.63%

7/2014

203

103

50.74%

8/2014

237

137

57.81%

9/2014

248

129

52.02%

Client C

1336

751

56.21%

7/2014

434

267

61.52%

8/2014

466

258

55.36%

9/2014

436

226

51.83%

Grand Total

2916

1581

52.49%

Slide4

Credit Score to Balance Range

#

OF

ACCOUNTS

RANGE

$0-$5K

$5K-$10K

$10K-$15K

$15K-$20K

$20K-$30K

$30K-$40K

$40K-$50K

$50K-$75K

$75K-$100K

$100K+

650+

131

213

212

138

176

94

66

82

16

10

600-649

98

165

151

112

128

72

32

55

11

14

550-599

186

280

204

117

129

81

37

60

13

19

500-549

524

583

384

226

280

145

91

91

32

27

450-499

1,587

1,460

813

488

584

306

170

230

49

12

400-449

3,170

2,920

1,532

833

951

519

316

358

47

 

350-399

7,529

6,914

3,240

1,745

1,885

974

542

613

85

1

300-349

11,331

10,508

5,085

2,577

2,569

1,297

730

786

106

2

250-299

11,010

10,499

5,821

2,616

2,668

1,215

651

710

102

2

200-249

6,661

6,865

4,453

2,204

2,277

958

508

522

61

2

150-199

2,938

3,273

2,278

1,268

1,346

648

328

323

44

1

100-149

1,872

2,063

1,314

781

888

495

257

317

24

2

Slide5

Balance to Income Activations

Balance / Income

$0-$5K

$5K-$10K

$10K-$15K

$15K-$20K

$20K-$30K

$30K-$40K

$40K-$50K

$50K-$75K

$75K-$100K

$100K+

90K+

1.5%

5.5%

13.2%

17.6%

13.6%

16.1%

26.2%

17.9%

29.4%

33.9%

60K-90K

1.1%

3.3%

7.7%

12.1%

13.0%

16.1%

15.7%

19.7%

20.8%

18.1%

50K-60K

0.9%

3.6%

8.3%

11.9%

14.0%

14.2%

18.5%

18.4%

18.6%

13.2%

40K-50K

1.5%

4.6%

9.4%

12.1%

15.3%

18.4%

14.3%

19.2%

24.4%

17.1%

30K-40K

1.4%

4.8%

9.0%

11.9%

15.5%

14.8%

17.3%

19.3%

16.7%

20.7%

<30K

1.4%

3.8%

8.5%

10.4%

11.6%

14.0%

10.3%

10.4%

13.5%

13.9%

Total

1.3%

4.3%

9.3%

12.7%

13.8%

15.6%

17.0%

17.5%

20.6%

19.5%

Slide6

Additional Changes since 7/1

Changed our process to adapt to new 7/1 regulations

Enhanced technology to streamline the process, improved efficiencies

SignNow

technology used where permitted by client

Clients who have kept

the process borrower friendly have better

success in

rehab

Fall Out Rate since 7/1 has increased

We contribute this to the change in programs as middle class having to pay larger balances under the 15% rule than pre 7/1

Lose more at first talk off due to income & expense validation

Proof of Expenses is another area where fall out occurs

NSF increases seen in the lowest bracket - $5 payments

Overall the percentage of payments to NSFs about the same

Percentage of AWG Rehabs have increased since post 7/1

Many taking advantage of the suspension

70-80% return on updated paperwork for those in this group

Slide7

Impact of Income-Driven Repayment

PIF

/

Repayment

Consolidation

Rehabilitation

Rehabilitation

or Consolidation

PIF/Repayment

Rehabilitation

Consolidation

Rehabilitation

Slide8

Rehabilitation Payment Trends

Payment Range

Slide9

Rehabilitation Completion Rate Trends

Slide10

Observations

All but the highest income borrowers can now qualify and afford their rehabilitation payments

The number of borrowers completing the rehabilitation program should increase as a result of these regulatory changes

Lower payments will likely mean a higher percentage of rehab agreements will complete the qualifying period

Even with AWG suspension rules, the rehab program remains attractive to garnishees

Due to the number of borrowers needing to

utilize

an

income-driven repayment

program, aiding

a borrower’s

transition to

his/her new

lender’s payment plan is increasingly important

Slide11

P

lus adverse credit

Betsy Mayotte

American Student Assistance

November 4, 2014

Slide12

Background

November, 2011 ED modified PLUS credit check

Before change - 72% approved, 28% denied

After change – 38% denied

Some HBCU’s jumped 75%

Slide13

PLUS Loan Definitions

Charged off

– debt written off as loss, still subject to collection action

In collection

– a debt sent to a collection agency or is subject to more intense collection efforts due to inaction or unsatisfactory action by the borrower

Slide14

Plus loan – adverse credit

An applicant for a PLUS loan is considered to have adverse credit if they:

Has one or more debts totaling more than $2,085 that

Are 90 days or more past due (as of date of credit report) or

Have been placed in collection or charged off within the last two years

Has been subject to one or more of the following in the last 5 years:

Default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or

Write off of a Title IV debt

Slide15

Plus loan - adverse credit

Maximum debt threshold will be adjusted if the change in the Consumer Price Index is $100 or more

Rounded up to the nearest $5

Changes announced in federal register

Slide16

Plus loan - counseling

Counseling available to all PLUS borrowers and endorsers

No later than 2015-2016 academic year

Mandatory for borrowers who obtain loan due to appeal or endorser

Slide17

Plus loan - counseling

Voluntary counseling will contain

Repayment estimator

Repayment plan information

Budgeting information

Strategies to avoid delinquency and default

Slide18

Plus loan - counseling

Mandatory counseling will contain

Repayment estimator

Repayment plan information

Budgeting information

Strategies to avoid delinquency and default

Additional financial literacy informationCurrent debt level and estimated repayment amounts

Slide19

Plus loan – other changes

Credit checks will remain valid for 180 days

Default rates will be published “as appropriate”

Slide20

Questions

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