Do you believe I started this thing just one year ago on February 2, 2006? My personal little space to rant about all things financial aid.
So my theme for the past year has been to demonstrate that Wellness works. Several years ago ASA started our VFA experimentation to see if it were possible to influence student behavior to keep them fiscally healthy and persistent in the repayment of their student loans. I've written about the various successes our default management products (Journeys, Transitions, Pathways, Bright Beginnings) have enjoyed over the past several years. Through these writings I think I have demonstrated that:
Students do have an easier time repaying loans when they have the right information at the time they need it.
Students who are in trouble with their loans will reach out for help if they feel they can reach out to a "trusted agent."
Emphasizing rehabilitation over collections is the right thing to do for students.
We have success in reaching students if we use modern communication techniques.
The proof is that ASA has a default rate significantly lower than the national average of guarantors.
The ASA guarantee does make a difference.
So what next? As our "experiments" have turned into full blown "products", one thing has become clear: The vast majority of students are doing just fine in repaying their loans. (It may hurt, but they are managing!) If on average, only 6% of ASA loans are delinquent at any one time, then over 90% of students are finding ways to repay. It is probably time to shift our emphasis away from programs that deal with all borrowers and find ways to identify students who will tend to have problems. We have already identified withdrawn students as a high risk population and developed products for them (See blog entry 5/22/06 on "Transitions").
It is time we begin to look at students who are struggling with delinquency to see if there are any patterns we can observe. Students who are late in repayment have it pretty tough. They are being hassled for payments, their interest and late charges are amassing, and their credit is getting shoddy. But on the bright side, this is the group who is willing and trying to repay their student loans. Granted they are struggling and late, but for the vast majority of them they understand their obligations and are trying! This group is our next challenge.
Do you have any observations about delinquent students?
Best, Duane
Posted by Duane Quinn on February 02, 2007 at 09:33 AM EST
I moved out of my parents house at 17 and have been paying my own bills since i was older enough (about 16) to hold down a job. I work over 40 hours a week along with being a full time student. And I have a 3.8 GPA too. I work so hard at my job just to make a little over minimum wage and I am struggling to pay my bills. I only have one credit card with a 1000 dollar credit line, but I have never spent more than 150 dollars on it. Last year my car broke down and I was forced to buy a new car. My car insurance is extremely high because I have only had my lisence for 2.5 years. The price of food, school, gas, car insurance, my car loan, health insurance, and other necessities sometimes makes it nearly impossible for me to pay bills on time. I dont think most deliquent payments are because the student doesnt know how to manage their money, I think its because there are just too many expenses today. Why does school have to cost so much!?
Posted by Corn Muffin on February 19, 2007 at 09:07 AM EST
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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.
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