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Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

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Page 1: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Developing a Financial Literacy and

Default Prevention Program

Presented by:

Will Lindsey

FedLoan Servicing

Page 2: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Why create a program?

• Preparing your students for financial success during college will help them to be successful after college.

• Prepared students will be more likely to:– Successfully repay their student loans.– Advocate for the value of higher education.– Become active alumni.

Page 3: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Where do I begin?

• Establish a team of resources on your campus.• Create common themes through simple, meaningful

messages.• Use relatable examples and help students create

their own.• Implement a diversified approach.• Track your success with measurable objectives.

Page 4: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Getting Started

In School Repayment Delinquent

Approach program building from the student’s perspective.Approach program building from the student’s perspective.

Financial literacy is the on-campus aspect of your default prevention program. It’s a crucial first step.

Page 5: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

In School - Campus Involvement

• Your administration and faculty could be impacted by your school’s high Cohort Default Rate.

Make them part of the solution!!!

• Create a team on your campus which meets regularly to strategize and discuss initiatives.

Page 6: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

How do I involve other offices on my campus?

Establish a team including:– Financial Aid Staff– Career Counseling Center– Faculty (Finance, Marketing, etc.)– Resident Life Staff– Greek Life/Social Groups– Athletic Clubs– Political Organizations– Academic Associations– Students

Page 7: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

How do I engage my students?

• Consider a diversified approach– Personalized communications on their total

indebtedness– Social media (Facebook, Twitter, etc.)– In-person sessions– School publications– Supplement existing courses/programs, such as

entrance counseling and orientation– Peer mentors/alumni buddies

Page 8: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

What should I cover?

• Understanding Financial Aid

• Budgeting– Assess their financial situation– Identify needs vs. wants– Understand their financial behaviors– Create a plan for the future

• Time Management

• Using Credit Wisely

Page 9: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

How do I measure success of on-campus initiatives?

• Set specific goals for each event and initiative

• Gauge student participation

• Survey students for feedback

• Monitor behavioral changes– Reduced overborrowing– Reduced loan default

Page 10: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Returning Students – Before You Owe

Encourages students to record their loan balance and servicer information before they take on additional debt.

Worksheet found at MyFedLoan.org/schools on our Publications page.

Page 11: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Entering Grace - Before You Go

Provides students with a convenient location to record the information they learn when reviewing their loan portfolio at Exit Counseling.

Worksheet found at MyFedLoan.org/schools on our Publications page.

Page 12: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Targeting At-Risk Students

• Review prior defaulters at your school to identify common characteristics.– Withdrawn students– Transfer students– Participants in particular programs of study– SAP students– Students who borrowed above the cost of

attendance

Page 13: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Delinquent Borrower Communications

• In-school– Meet with “high-risk” students, based on your research– Encourage small, manageable payments while in school

• Grace– Send reminder to students of approaching payments– Make phone calls to “high-risk” students

• Repayment– Make phone calls to students ending a deferment/forbearance– Send letters/emails to early stage delinquent students– Make phone calls to late stage delinquent students

Page 14: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Delinquent - NSLDS Resources

Use the NSLDS Delinquent Borrower Report to produce letters to delinquent borrowers who have loans serviced by any federal servicer.

More information and instructions found at MyFedLoan.org/schools on our Training page.

Page 15: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Setting a Goal

• Set a target default rate for your institution.– Identify the maximum number of defaults to meet your target.– Project your rates throughout the year by monitoring current

defaulted borrowers and borrowers over 300 days delinquent.– Control your three-year rate by contacting your two-year

defaulters and encouraging rehabilitation.

Page 16: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Measure Success

Categorize your efforts, track your success, and make adjustments.

Late-Stage Delinquency Students - Total Students (100)

Sample Size

EffortResponded

to effortResolved delinquency

through paymentResolved delinquency through

other means

50 Email 15 (30%) 7 (47%) 8 (53%)

50 Phone Call 30 (60%) 10 (33%) 20 (67%)

High-Risk Students - Total Students (90)

Sample Size

Risk FactorMade in-school

paymentEnrolled in automatic

paymentsNon-delinquent

50 Transfer 5 (10%) 15 (30%) 45 (90%)

40 SAP 2 (5%) 15 (38%) 30 (75%)

Establish an action plan and follow the students targeted to determine their success.

Page 17: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Take Action

• What are you doing today for financial literacy and default prevention?

• What would you like to start immediately?• What changes would you like to implement

over the next six months?

Page 18: Developing a Financial Literacy and Default Prevention Program Presented by: Will Lindsey FedLoan Servicing

Questions?

Want to learn more? Contact your sector representative!