Wellness Works: Bright Beginnings
ASA's Wellness program called "Bright Beginnings" is aimed at students who have not been successful in repayment of their student loans and have defaulted. For most guaranty agencies, the default on a student loan initiates collection activity, for which the agency receives a highly lucrative income stream. I have told you before (see entry and comments for 2/03/06) that under ASA's Voluntary Flexible Agreement (VFA) ASA receives no profit for collecting defaulted loans. Our income stream is from keeping students in repayment. So "Bright Beginnings" is a campaign to rehabilitate borrowers back into repayment, rather than simply collecting the defaulted loan.
Rehabilitation is a process where the defaulted borrower agrees to enter back into a repayment schedule. After successfully making nine consecutive on-time payments, the loan leaves the default status. The borrower immediately renews a good credit standing and is again eligible to apply for federal student aid.
The principle behind "Bright Beginnings" is to understand that borrowers do not want to default, and that the default is probably due to some problems or simply a lack of information. The defaulted student loan borrower is not a "dead beat" but rather a customer with a problem. ASA's rehabilitation counselors are trained to respect the customer, take the customer's present situation in consideration, and offer information and solutions that can lead to rehabilitation.
Getting a borrower into a rehabilitation schedule is just the beginning of the "Bright Beginnings" program. We understand that a defaulted borrower is at risk for relapse and needs encouragement and support. Rehabilitation counselors provide their borrowers with reminders, hand-written letters of support and follow-up phone calls.
The success of the "Bright Beginnings" program is measured not only in successful borrowers who get out of default, but in actual dollars. In FY2000, before "Bright Beginnings," ASA rehabilitated $6.23 million in defaulted student loans. In FY2004 that amount blossomed to $46.73 million, and will exceed $50 million this year.
What do you think about these findings?
Best,
Duane
Posted by Duane Quinn on June 05, 2006 at 10:35 AM EST
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Blog Author
Mike Ryan
Vice President of Borrower Services
Biography
Michael T. Ryan is Vice President of Borrower Services for American Student Assistance, a position he has held since joining ASA in February, 2003. Mr. Ryan heads ASA’s Borrower Services Division, which is responsible for all aspects of the management and delivery of service to borrowers in ASA’s education loan portfolio, including all default prevention and recovery efforts.
In his 20-plus year career in higher education financing, Mr. Ryan has held key management positions at the Massachusetts Educational Financing Authority (MEFA), and Key Education Resources (formerly Knight Tuition Payment Plans). As MEFA’s Associate Director for Programs and Operations, Mr. Ryan facilitated MEFA’s entry as a Federal Family Education Loan Program (FFELP) provider. He also played an instrumental role in the introduction of the U. Fund, (MEFA’s Section 529 College Investing Plan), managed MEFA’s U. Plan (Prepaid Tuition Program), and was responsible for the operation of MEFA’s loan programs.
While at Knight and Key, Mr. Ryan held progressively responsible management positions, from Account Manager to Senior Vice President.
Mr. Ryan is a graduate of Merrimack College.
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