Students who default on a loan will face a challenging financial situation for many years to come – from applying for a car loan to a home mortgage, a delinquency will prevent them from getting good rates or even qualifying at all. Potential employers, landlords and insurance companies also run credit checks, so the repercussions of a default can be staggering.
Before a borrower can make the mistake of defaulting, our default aversion staff makes every effort to contact the borrower and work out a solution instead of simply starting collection. We do this through a proactive, persistent process that strives to maintain ongoing communication:
- Past-due letter: Once they are 16 days past due, borrowers receive a personalized, hand-addressed inquiry letter, informing them of various options if they are experiencing financial difficulty.
- Follow-up calls: Each delinquency call is made by a real person instead of an auto dial – our goal is to actually contact the borrower instead of just logging a certain number of attempts. Default aversion representatives know who they are calling and why in advance, rather than having a name pop up in front of them. If a default aversion representative is unable to reach a borrower, additional calls are scheduled for different times of the day and various days of the week, including evening hours and Saturdays.
- Thorough review: When we succeed at reaching a borrower, we go over their entire account history, not just the delinquency, so the default aversion staff can educate the borrower on all available options and find the best strategy for repayment. One such strategy – paying off higher-rate debt first.
Our staff’s credentials speak for themselves. The average default aversion staff member has 13 years of student loan experience. Through experienced representatives who take the time to get to know the borrower, we provide a personalized default aversion approach:
All letters are hand-addressed and use postage stamps instead of window envelopes and metered mail. Inbound and outbound calls and all correspondence are based on borrowers’ individual situation, taking into consideration their loan program and other specifics. The goal is to establish a relationship with every borrower in delinquency and follow up with them regularly to help them bring their account current and avoid reporting the delinquency to credit agencies.
The commitment of our default aversion team shows. According to Citi’s Consumer ABS Outlook 2008, our private loan delinquency levels are the lowest in the industry. Even in delinquency situations, T.H.E. borrowers are benefiting from our personalized approach and proactive problem-solving.