1. Default Collection Dwight Vigna | Dec. 2014 U.S. Department of Education Student Loan Servicing Summit

2. Goal 1: Be respectful to borrowers and help them find the best solution to resolve their debt regardless of the commission being paid Goal 2: Increase the efficiency of collection effort to limit student loan program costs for Federal taxpayers Our Goals

3. Default Initial Processing • Delinquency day 361, borrowers are added to the Debt Management and Collections System (DMCS) • Welcome letter is sent • Borrower has 60 days to respond • The borrower is directed to our Call Center – 800-621-3115 and our website www.myeddebt.com

4. No Response to Welcome Letter • Borrower will be reported as in default to Credit Bureaus • Borrower is sent to Private Collection Agency • The Department adds a collection cost fee of 24.34% of the outstanding P&I to the borrower’s account

5. Borrower Responds to Letter • Borrower works with the Call Center to resolve their debt • No collection costs are added • Borrower never talks with a PCA

6. PCA Recovery Process • Use a “Waterfall” approach for locating the borrower • Are required to use the following framework for collections • Payment In Full • May offer a compromise • Rehabilitation • Consolidation

7. Involuntary Payments • PCAs can start the Due Diligence for Administrative Wage Garnishment (AWG) • A Federal employee must actually release the letter for garnishment

8. Involuntary Payments • Treasury Offset Program • PCAs have nothing to do with this and receive no compensation • Required by law • Administrated by Treasury • Hardship Hearings • Over $2 billion in recoveries last year

9. Involuntary Payments • Refer to Department of Justice • If the PCA finds assets they can create a litigation package for review • All packages are reviewed by FSA • FSA decides which packages are forwarded to DOJ • Once sent to DOJ we only track payments in order to do normal reporting

10. PCA Work • The PCA must keep each borrower for six months • If a borrower is returned they will be transferred to a different PCA

11. PCA Oversight • We use Call Monitoring of recorded calls • 40 calls per PCA per month • We look for both what should be said and what should not be said • Corrective Action plans are created for issues and we follow up to ensure they are completed • On-Site Reviews • On-site reviews are done to check on processing and procedures

12. QUESTIONS?