Students Can't Participate in a Program They Don't Understand
Have you ever been frustrated when students don't return a form or complete it correctly? Rather than moaning "what's wrong with these students?" have you tried looking at the actual form or the instructions themselves?
That's what we did at ASA with some recently rehabilitated borrowers. To remind you, rehabilitation is a process where a defaulted borrower agrees to make nine consecutive on-time payments, and by doing so is removed from default. We call this program "Bright Beginnings" (see 06/05/06 entry).
One of the realities of rehabilitated borrowers is that they have a tendency to re-default. But we have proven that we can lower this rate of re-default if we can get the recently rehabilitated borrower to sign up for their loan payments through debit ACH (Automated Clearing House). In this process, the student completes a form authorizing the servicer to debit a bank account for the loan payment on a monthly basis. But it is hard to get students to enter into this process, even though there are benefits to participation in debit ACH.
You may ask, "What's wrong with these borrowers?" But another legitimate question might be, "Is there something wrong with the participation form?"
In a recent experiment with ASA's servicer partner Affiliated Computer Services, Inc. (ACS), we redesigned the form and introductory letter. The new ACH sign-up form was structured to emphasize the .25 percent interest rate reduction borrowers receive for making payments with ACH. A cover letter co-branded with ASA's and ACS's logos was created to emphasize the importance of enrolling in ACH as a way to maintain the benefits of rehabilitation. This form and cover letter were mailed to borrowers with the rehab agreement and borrowers were encouraged to return both forms to ASA in a timely manner.
Under the old ACH form and sign-up process, 21 percent of borrowers enrolled in the program. Using the new form and cover letter, 49 percent of borrowers completing the rehabilitation program signed up for ACH.
There is nothing wrong with the borrowers . . . it's the forms and instructions that they did not understand!
Try it yourself. Grab some students and have them go over your forms. Let them tell you what they understand and what they don't. Then let me know your results.
Best,
Duane
Posted by Duane Quinn on June 13, 2006 at 10:24 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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