The Webinar Titled. Findings from a Student Loan Debt Repayment Counseling Pilot Program. Will Begin at 12pm CST (1pm ET, 11am MT, 10am PT)!

Transcription

1 The Webinar Titled Findings from a Student Loan Debt Repayment Counseling Pilot Program Will Begin at 12pm CST (1pm ET, 11am MT, 10am PT)! Thank you for joining us!

2 Findings from a Student Loan Debt Repayment Counseling Pilot Program September 22, pm-1pm CST Brought to you by: Center for Financial Security at the University of Wisconsin- Madison

3 Today s Presenter: Vicki Jacobson is the director of the Center for Excellence in Financial Counseling at the University of Missouri-St. Louis. She previously served as the president of The Foundation for Credit Education prior to its transition as a center at the university. During her tenure with the foundation, she worked with student loan law experts to design and deliver training to nonprofit credit and housing counselors on student loan borrower repayment. Jacobson has served in various management roles for the regional Consumer Credit Counseling Service of St. Louis.

4 FINDINGS FROM A STUDENT LOAN DEBT REPAYMENT COUNSELING PILOT PROGRAM A Center for Financial Security Webinar September 22, 2015 Presented by the Center for Excellence in Financial Counseling

5 Webinar overview Look at the current state of student loan debt repayment in the U.S. Provide a brief overview of CEFC s student loan debt repayment counseling program design and implementation Review highlights of the program evaluation findings Note lessons learned; where do we go from here? 2

6 Federal student loan debt burdens Borrowers owe over $1.2 trillion in student loan debt 40 million consumers have at least one student loan 7 million borrowers are in default 11.5 percent of student loans were at least three months delinquent as of June percent delinquency rate of 55 percent of total loan amount now in repayment About 10.5 percent of borrowers are in some form of deferment or forbearance In 2012, roughly 51 percent of borrowers were eligible for income-contingent repayment plans; only 20 percent enrolled 3

7 Where can financially distressed borrowers get help? Federal loan servicers Department of Education Well-intended providers Scammers 4

8 Overview of CEFC s work in helping student borrowers Stage 1: Trained over 400 financial counselors from 2006 to 2009 Stage 2: Combined counselor training with some program reporting Stage 3: Developed an approach that included quality control measures and based on a counseling framework that would help assure consistent delivery of treatment 5

9 Program development Conducted literature search for financial counseling model Explored health education and counseling model; patient follow up and confidence building about changing behavior Contracted with the faculty of the Counseling and Family Therapy Department to develop and deliver counselor communication skills training to complement the counseling model Contracted with National Consumer Law Center to develop and deliver technical skills training in student loan repayment for counselors and attorneys Developed program protocol and checklist for counseling process; included borrower legal consultation, if needed Designed program evaluation early in program development 6

10 Brief overview of counseling What prompted the borrower to seek help? What are their goals with respect to student loan repayment? Federal loans/nslds; in default? not in default? Private student loans/credit report Action Plan development Follow-up session scheduled Monitor accomplishment of action plan tasks Determine next tasks Schedule next follow-up session Legal consultation, if needed 7

11 How program differs from traditional credit counseling Emphasis on need for scheduled follow-up counseling sessions to monitor client action plan progress Combined emphasis on diagnosis, education, and behavior-change elements reinforced by an individualized prescriptive action plan A contractual relationship with a legal services provider that has expertise, in this case, in student loan repayment for borrower consultation and mentoring of counselors Close monitoring for implementing program protocol for quality control Professional third-party program evaluation 8

12 Program implementation Recruited financial counseling organizations and Legal Services partners Established MOUs; agreed to provide the free service separate from other services; established monthly reporting Provided monthly base stipend and monthly performance stipends Marketed new service to the community s financially distressed student borrowers Conducted counselor and attorney trainings Reviewed borrower files and providers reports monthly; conducted counselor and attorney teleconferences monthly 9

13 Program by the numbers: Outputs Counseled 1,239 borrowers over the 25-month pilot Analyzed data from 1,050 borrower files Roughly 80 percent attended a single session; 20 percent participated in multiple sessions 11 percent sought legal consultation Borrowers held a total of over $50 million in federal loan and over $14.5 million in private loans 10

14 Program borrower demographics Majority were in the 30 and under age group, followed by the 51 to 60 age group 80 percent of borrowers were employed full-time in some type of job, but less than 50 percent had found a job that allowed them to fully use their education Majority of borrowers had a monthly gross income in the range of $2,000 to $4,000, with the highest percentage falling below $3,000 Over 51 percent completed their education, earning a degree or certificate; 31 percent indicated they had not completed their education program, and over 17 percent did not indicate a completion status Across all age groups, the majority of borrower clients were women 11

15 Program borrowers student loan repayment status Slightly more than 20 percent of federal borrowers in 2013 and 2014 had loans in default Approximately 45 percent of the total federal loan balances were in deferment in 2014, more than double that for 2013 client borrowers Nearly 40 percent of total private loan balances for 2013 and 2014 involved a cosigner; for 10 percent of the loan balances, the cosigner was the client receiving services The bulk of private loans were held by borrowers age 30 and younger with 50 percent of the loan balance current 12

16 Program borrowers unsecured debt repayment status Approximately one-third of borrowers were not current on other unsecured debt. For those in default, the percentage was over 60 percent. Among borrowers not in default, 64 percent reported they were current with their credit card payments. By contrast, only 24 percent of defaulted borrowers reported being current with 61 percent indicating they were not current. Approximately 75 percent of borrowers were aware that filing bankruptcy would likely not clear their student loan student. 13

17 Public Policy Research Center: Program evaluation overview Explored using experimental design; pre/post test Developed two surveys that were distributed about one month after the borrower was counseled 846 surveys were distributed via Survey Monkey 186 borrowers responded to the survey request; 22 percent return rate Borrowers were asked questions: Relating to their student loan situation prior to and after counseling What they viewed as being the results of the counseling The level of confidence they felt in dealing with their student loans after meeting with the counselor 14

18 Highlights of program evaluation findings: Outcomes Nearly 39 percent of borrowers responded that they knew about their repayment options for their federal loans prior to counseling. Over 87 percent of counseled borrowers indicated they felt better informed about their available student loan repayment options as a result of the counseling. Over 57 percent responded that as a result of the counseling they changed their federal repayment plan because they qualified for a lower monthly payment amount. Over 53 percent of borrowers indicated they were on time with their student loan payments prior to counseling. Seventy-one percent responded they were making their monthly student loan payments on time as a result of the counseling. Nearly 74 percent of counseled borrowers responded that they agreed with the statement, I wish I had found a counseling program like this sooner. 15

19 Highlights of program evaluation findings continued: Nearly 84 percent of borrowers responded that as a result of the counseling they now trust that they will make good financial decisions in relation to their student loan debt. Over 66 percent of borrowers indicated they felt less stress about their student loan situation as a result of the counseling. Over 90 percent of borrowers responded that their student loans kept them from achieving their personal goals. About 30 percent of borrowers indicated they were still looking for help. 16

20 Counseling session rating scale A very brief scaling instrument was developed to capture the borrower s reaction to each counseling session in four areas. If they felt heard, understood and respected If the counselor and borrower worked on or talked about what the borrower wanted to work on and talk about If their level of concern about repaying their student loans changed If their feeling of control over their finances changed Preliminary analysis indicates that 92 percent of respondents rated each area with a score higher than 9 (out of 10). Additional analysis is underway to determine any progress regarding a borrower s rating from the first session to a second session, etc. 17

21 Lessons learned Demonstrated need for the program Must be provided as a separate service Delivered by outstanding, professional counselors Fidelity to program protocol is vital Monitor counselor performance Follow-up sessions important to monitor borrower action plan progress Professional third-party evaluation Integrate training process Technology 18

22 Future program expansion plans With additional funding, CEFC hopes to expand the program as a replicable campusbased community counseling center. Target financially distressed borrowers in repayment Help non completers possibly complete their education Enhance a borrower s opportunities for financial advancement Strengthen the region s workforce 19

23 Center for Excellence in Financial Counseling School of Public Policy and Administration University of Missouri-St. Louis 20

24 Q&A:

25 Findings from a Student Loan Debt Repayment Counseling Pilot Program For More Information Visit: To read the white paper on the pilot program:

26 Thank you for Attending: Findings from a Student Loan Debt Repayment Counseling Pilot Program Please stay tuned for next month s webinar invitation. October s webinar will be a Wisconsin focused webinar, which will provide information and resources surrounding the Affordable Care Act.