CMS Connection
Upcoming changes to the CMS system. For further details, click on the following two links.
CMS and three-year cohort changes
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Happy New Year!
Happy new cohort year, that is. As we bid farewell to CY 2008, it’s time to focus our efforts on CY 2009. The “new year” is a good opportunity to reflect on your school’s default prevention practices and make a resolution to improve them. Were you successful in calling your delinquent borrowers or could you have averted more defaults? Were there any default prevention strategies you intended to implement last year but never did?
It’s time to redouble your default prevention efforts! Default prevention is as important now as ever and continues to be a focus of the U.S. Department of Education (ED). As you may know, CY 2009 is the first year subject to the three-year cohort default rate (CDR) calculation.
Official rates for CY 2007 were released on September 14, 2009:
- The national rate for CY 2007 was 6.7 percent, up from 5.2 percent in CY 2006. Increases were seen for all types of schools—public, private and proprietary as well as four year and two year. ED attributes the rise to the recession and a growth in student loan debt.
As you begin to shift your focus to CY 2009, keep in mind that any borrowers who attended and took out Stafford loan(s) at your school and entered repayment on those loans between 10/1/08 and 9/30/09 make up your 2009 cohort. These borrowers will continue to be tracked for default until 9/30/11. This means any borrower who entered repayment between 10/1/08 and 9/30/09 and defaults by 9/30/11 will impact your 2009 cohort default rate. These are the borrowers who should receive your immediate attention!
Tracking borrowers for default for a third year requires different default prevention strategies. A single deferment or forbearance will no longer push a borrower outside of the cohort tracking period. Borrowers that exit a deferment or forbearance period may still have time to default and count against your 2009 cohort. This means you need to focus your efforts on finding a long-term solution for your delinquent borrowers.
Below are some industry best practices for working with delinquent borrowers.
Delinquent borrowers need counseling, so don’t be shy about providing it. A phone call is the next best thing to speaking face to face. Delinquent borrowers often just need to be educated on repayment or postponement options. Sending letters is a “feel good” task but is rarely effective, and takes up valuable time and resources that could be better spent picking up the phone. Did you know that a delinquent borrower who reaches the late stage of delinquency will have already received up to 15 letters just from the lender and guarantor? Another best practice is to call your borrowers at the end of their deferment or forbearance period to determine if they can begin making their monthly payments, or if they need a new deferment, forbearance or repayment plan. Remember, the Income-Based Repayment plan became available 7/1/2009. Borrowers under this plan can greatly lower their monthly payments!
- Maintain control of default prevention activities.
Many deferment and forbearance requests are denied because information or documentation is missing. Because lenders are not required to contact the borrower to advise them of a denial, consider sending the form to the borrower with a self-addressed envelope, and submitting it to the lender yourself. Or, consider faxing the form to the borrower and having them fax it back to you so you can check their work. Then you can submit the form to the lender on the borrower’s behalf.
Anyone who spends a lot of time calling delinquent borrowers quickly realizes just how challenging it can be to successfully reach them. Students frequently change addresses and often use cell phones as their primary means of communication. The one reference that always seems to know where the borrower is—you guessed it, grandma! If you’re having trouble reaching a borrower, and grandma is listed as a reference on their master promissory note, give her a call!
- Don’t lose sight of the big picture.
Default Prevention is, in many ways, a numbers game. No lender, guarantor or school can contact and avert 100 percent of their delinquent borrowers. There will always be those who can’t be reached or, once reached, can’t be helped, either because they don’t want help or they’ve run out of options. But don’t let those situations dissuade you from picking up the phone again. Remember—for every borrower who can’t or won’t be helped, there are 10 more out there whose life can be positively affected by your call.
Cohort Year Rollover
Beginning Monday, October 12, when you view your two-year CDR information your data for 2008 will no longer appear on the Main page in CMS. Your 2008 cohort data will still be visible, though, when viewing three-year CDR information.
When viewing two-year CDR information, the Main page will list three cohort years: 2009, 2010 and 2011. When viewing three-year CDR information, the Main page will list four cohort years: 2008, 2009, 2010 and 2011.
You can still access your 2008 cohort borrower information by using the Search page to locate the borrower. It will also appear on CMS reports. If you have any borrowers in the 2008 cohort year with a scheduled follow-up contact, they will appear at the bottom of the last page in your Work Queue.
To get a full list of borrowers in your 2008 cohort, click on the “Simulated Cohort Report” from the Reports page and choose “2008.”
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