1. Uses its resources efficiently.
·
Establishes a default management team by
engaging its chief executive officer and relevant senior staff and enlisting
the support of representatives from departments other than the financial aid office. For example, a monthly meetings with staff to
review the “Default Prevention – Management Report” provided by Horizon
Educational Resources.
·
Identifies and allocates the personnel,
administrative, and financial resources appropriate to implement the default
management plan.
·
Establish a process to ensure the accuracy of
data used to calculate its draft and official cohort default rates for the
Federal Family Loan Program, Direct Loan Program, and the Federal Perkins Loan
Program. Establish a data collection
system to track and analyze borrowers who default on their loans. This function
is performed by Horizon Educational Resources.
·
Define evaluation methods, sets default
reduction targets, and conduct an annual self-evaluation of the administration
of the Title IV programs to identify institutional practices that could be
modified to reduce defaults, and then implements those modifications.
2. Works to reduce its number of
dropouts.
·
Ensures that the admission policies and
screening practices only admit students who have a reasonable expectation of
succeeding in their program of study.
·
Enhance the enrollment retention and academic
persistence of borrowers through counseling and academic assistance, especially
for academically high-risk students.
·
Evaluate and improve, if necessary, the
curricula, facilities, materials, equipment, qualifications and size of
faculty, and other aspects of its educational program to ensure that borrowers
remain in school and that they are employed after they complete their program
of study.
3. Works to ensure that its borrowers
can repay their loans.
·
Assists borrowers who are experiencing
difficulty in finding employment through career counseling, job placement
assistance, and information about repayment options, including the availability
of deferments and forbearances.
4. Provides enhanced initial and exit
counseling.
·
In addition to requirements in 34 CFR 682.604
and 34 CFR 685.304, provide the information listed in the "Initial and
Exit Counseling" section. See Exhibit
A
·
Use audio-visual materials and written tests
during counseling to ensure that borrowers understand the terms and conditions
of their loans.
·
If borrowers demonstrate that they do not
understand the terms and conditions of their loans (for example, by failing a
written test), provide additional, more intensive counseling.
5. Keeps in touch with its borrowers.
·
Frequently reviews borrowers' in-school status
to ensure that it recognizes instances in which borrowers withdraw without
notice.
·
Contact borrowers during their grace period to
remind them of the importance of the repayment obligation and of the
consequences of default. See Exhibit
B
·
Track borrowers’ in delinquency, by obtaining
reports from guaranty agencies and lenders. See Exhibit B
·
Keeps records updated regarding borrowers'
addresses, telephone numbers, employers, and employers' addresses.
·
If necessary, uses activities such as skip
tracing and sending letters "Forwarding and Address Correction
Requested" to maintain contact with borrowers who have moved. See
Exhibit B.
EXHIBIT A
Enhanced Initial and Exit
Counseling
In
addition to meeting the requirements in 34 CFR 682.604 and 34 CFR 685.304,
provide the following information to student borrowers during initial and exit
counseling-
1. Repaying the loan.
·
Estimated balance of the borrower's loan(s) when
the borrower completes the program.
·
Interest rate on the borrowers’ loan(s).
·
The name, address, and telephone number for the
borrowers’ lender.
·
Estimated average amount of the borrower's
required monthly payments on the loan's balance. (During exit counseling,
provide a sample loan repayment schedule based on the borrower's total loan
indebtedness.)
·
Estimated monthly income that the borrower can
reasonably expect to receive in his or her first year of employment based on
the education received at the school.
·
Estimated date of the borrowers’ first scheduled
payment.
2. Personal financial management and Title IV loans.
·
Dissatisfaction with, or non-receipt of, the
educational services being offered by the school does not excuse borrowers from
repayment of their FFEL, Direct Loans or Federal Perkins Loans.
·
Borrowers must inform their lenders immediately
of any change of name, address, telephone number, or Social Security number.
·
If a borrower is unable to make a scheduled
payment, he or she should contact the lender before the payment's due date to
discuss his or her other repayment options.
·
General information about budgeting of living
expenses and other aspects of personal financial management;
o
Deferment, forbearance, cancellation,
consolidation, and other repayment options, including procedures for obtaining
these benefits; and
o
The sale of a loan by a lender or the use of an
outside contractor to service loans.
3. Information about delinquency and default.
·
A description of the charges imposed for failure
by a borrower to pay all or part of a scheduled payment when it's due.
·
The consequences of a borrower's failure to
repay a loan, including:
o
A damaged credit rating for at least 7 years,
o
Loss of generous repayment schedule and
deferment options,
o
Possible seizure of Federal and State income tax
refunds due,
o
Exposure to civil suit,
o
Referral of the account to a collection agency,
o
Liability for collection costs and attorney's
fees,
o
Garnishment of wages, and
o
Loss of eligibility for further Federal Title IV
student assistance.
4. Requesting borrower information.
·
During initial counseling, obtain information
from the borrower regarding references and family members beyond those provided
on the loan application.
·
During exit counseling, obtain updated
information from the borrower regarding the borrower's address, the addresses
of the borrower's references and family members, and the name and address of
the borrower's expected employer.
EXHIBIT B
"Horizon Student Services"
STAFFORD - GRACE PERIOD:
Phase I:
60 days following LDA - 60 day grace letter * (FFEL & Direct only)
120 days following LDA - 120 day grace letter * (FFEL &
Direct only)
180 days following LDA - 180 day grace letter * (FFEL &
Direct only)
Phase II:
Phone call attempt to borrower to
verify receipt of a payment booklet.
(FFEL
& Direct only)
PRECLAIMS:
(Performed when pre-claims assistance has been requested.)
30-59 days delinquent - Appropriate DUN Letter - as deemed necessary *
(FFEL / Direct / Perkins)
Phase III: (FFEL / Direct / Perkins)
60 days delinquent - 60 day Delinquency Letter *
120 days delinquent - Appropriate DUN Letter - as deemed necessary *
150 days delinquent - 150 day Delinquency Letter *
180 days delinquent - Appropriate DUN Letter - as deemed necessary *
>210 days delinquent - Appropriate DUN Letters - as deemed necessary *
All
Delinquencies- Send a
letter to references on borrowers who could not be contacted or require skip
procedures (FFEL & Direct only).
Send lender notification on any new information about borrower. Phone call attempts throughout the entire
delinquency period.
(* - All mail returned
would be skipped to obtain a new address and phone number. Servicer will be notified in all cases when a
new address and phone number is obtained.)
Default Prevention Techniques:
Horizon will work with the Clients’ borrowers to help prevent loan
defaults by: encouraging borrowers to make payments; assistance in
communicating with the servicer and guarantor; assisting the borrower through
the complex process of the student loan program; and assisting the borrower
with the processing of deferments and forbearances. Borrowers will always be contacted by phone,
when possible to ask about problems with Lenders / Servicers or any other
questions they may have. The borrower
will continue to be contacted until the claim is paid on the borrower’s student
loan.
