Collection Agency Perspective Lynn Heineman Senior Vice President Account Control Technology Inc Pre amp Post 71 Regulation Changes of activations accounts into billing have stayed status quo on ED increased in guarantor side ID: 624140
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Slide1
New Regulations – Rehabilitation, AWG and PLUS Adverse CreditSlide2
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
2Slide5
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 groupSlide7
Impact of Income-Driven Repayment
PIF
/
Repayment
Consolidation
Rehabilitation
Rehabilitation
or Consolidation
PIF/Repayment
Rehabilitation
Consolidation
RehabilitationSlide8
Rehabilitation Payment Trends
Payment Range Slide9
Rehabilitation Completion Rate TrendsSlide10
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 importantSlide11
P
lus adverse credit
Betsy Mayotte
American Student Assistance
November 4, 2014Slide12
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 borrowerSlide14
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 debtSlide15
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 registerSlide16
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 endorserSlide17
Plus loan - counseling
Voluntary counseling will contain
Repayment estimator
Repayment plan information
Budgeting information
Strategies to avoid delinquency and defaultSlide18
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 amountsSlide19
Plus loan – other changes
Credit checks will remain valid for 180 days
Default rates will be published “as appropriate”Slide20
Questions