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Saturday, November 8, 2014

Midterm Election News



LEGISLATIVE RELATIONS COMMITTEE

GOP Sweeps Congress in Midterm Elections



Even with a few important races still undecided, the Republican party won big in the midterm elections held on Tuesday. The GOP will assume control of the U.S. Senate in January with a majority of at least four seats, 52 to 48. Alaska’s Senate race has not been declared but the Republican candidate, Dan Sullivan, is leading incumbent Democratic Senator Mark Begich. The Virginia race has also not been officially declared, but Senator Mark Warner (D) is leading. In Louisiana, Senator Mary Landrieu (D) faces a December 6th runoff election, which will likely be difficult for her since in the midterm election the Republican candidates received 55.8 percent of the vote combined. In short, Republicans might end up with 54 Senate seats. Senator Angus King, an independent from Maine, has announced that he will continue to caucus with the Democrats next Congress.

In the U.S. House of Representatives, the Republicans increased their majority with a total of at least 243 seats, with Republican candidates leading in several undecided races. The Republicans might end up with as many as 250 seats in the House. This will be the largest Republican House majority since 1928, making the chamber even more conservative in the next Congress. In total, there will be at least 69 new Members of Congress: 11 in the Senate (1 Democrat and 10 Republicans) and 58 in the House (18 Democrats and 40 Republicans).

While power will shift significantly in both chambers, leadership on both sides of the aisle will most likely remain unchanged. Current U.S. House Speaker John Boehner (R-OH) is expected to be re-elected as the Speaker of the House next Congress in January, while the current Senate Minority Leader Mitch McConnell (R-KY) is expected to become the next Senate Majority Leader, replacing the current Majority Leader Harry Reid (D-NV)—it is presumed that Leader Reid will run for Minority Leader. Congresswoman Nancy Pelosi (D-CA), the current House Democratic Leader, announced that she also intends to seek re-election to her leadership post for the next Congress.

In terms of the impact on key education and appropriations committees, a full list prepared by the Committee for Education Funding (CEF) is included in the expanded version of today’s Daily Briefing. Congressman Tim Bishop (D-NY), a member of the Education and the Workforce Committee and the House lead on Elizabeth Warren’s student loan refinancing bill, was defeated, as was Senate HELP Committee member Senator Kay Hagan (D-NC). In Arkansas, Senator Mark Pryor (D), a member of the Senate Appropriations Committee, was defeated and two other Democratic appropriators are in jeopardy: Senators Begich (D-AK) and Landrieu (D-LA). Also, Representative Mike Honda (D-CA) is leading in his race but it too has not been called (the other candidate is also a Democrat).

U.S. House Speaker John Boehner (R-OH) issued a press release after the election on his outlook for the 114th Congress, in which he referenced his five-point roadmap initially released on October 29. It is interesting to note that point five is Improving Our Education System. One of the three items listed under that point focuses on making education more accessible and affordable: "From early childhood education to college, the cost of education continues to rise across the board. In July, the House passed three bipartisan bills to address the cost of college: H.R. 3136, H.R. 4983, and H.R. 4984. The House has also passed H.R. 3393, which would make it easier for families to utilize tax credits to save and pay for college.” House Majority Leader Kevin McCarthy (R-CA) has said that the first item on the agenda for House Republicans next year will be to produce a budget. In an interview with Fox News, Leader McCarthy said he was optimistic that House and Senate Republicans will work together next year to pass the FY 2016 Budget that will give the American people more clarity as to how the country will pay down the national debt and fund national priorities. With the Senate in Republican hands next year, it will be easier to pass budget resolutions using the reconciliation process that requires only a majority vote, not a supermajority of 60 votes needed to break a Senate filibuster.

Meanwhile, at a press conference held the day after the elections, President Obama said that he would like to work with the Republican controlled Congress where possible next year, but also struck a defiant tone arguing that the massive losses faced by Democrats were less a repudiation of his policies and more a reflection of voter frustration over the gridlock in Washington. The President said that his goals for the remaining few months left this Congress, known as the "lame-duck” session, will include seeking more than $6 billion in new funding for the domestic and international Ebola response, a new authorization for the use of military force against Islamic State of Iraq and the Levant (ISIL), and passing a budget.

Information submitted by Sharon Oliver, Chair, SASFAA Legislative Relations Committee.


Wednesday, November 5, 2014

Six Questions to Help Analyze Your Default Prevention Progress

Submitted by: Shannon Cross, USA Funds Account Executive

You have your school’s official cohort default rate for 2011. Now let’s look to the future and see how your default prevention efforts are faring with your existing cohorts of student-borrowers.

Consider your answers to these six questions. Those answers will help you gauge your future cohort default rates — and adjust your default prevention efforts accordingly.

1. Where are you getting your portfolio information?
Use reports from the National Student Loan Data System and servicers to get information regarding your active cohort periods. Delinquency reports received directly from servicers offer the most recent data. Review the reports to determine who’s in the cohort and whether their repayment status is current, delinquent or defaulted.

2. What is your current default rate goal?
Aim for a rate that’s at least in line with or below that of your peer institutions and the national average.

3. How many borrowers in your 2013 portfolio have defaulted?
If you know your current default rate, then you’ll have a better idea how close you are to your goal.

Say, for example, your 2013 cohort default rate goal is 10 percent. Your 2013 cohort has 200 borrowers. You see that 10 of those borrowers currently are in default, which means that the current cohort default rate is 5 percent. So now you know that 10 or fewer borrowers can default by the end of the cohort default rate period to achieve your 10 percent goal.

4. How many more borrowers are likely to default based on current data?
The number of borrowers who currently have defaulted represents your “best-case” default rate and assumes no additional borrowers will default.  Now determine how many borrowers currently are delinquent. If there were no intervention for these delinquent borrowers, they could default — and that number plus the number of defaulted borrowers represents your “worst-case” default rate.

Let’s look at another example with our 2013 cohort of 200 borrowers. Ten borrowers have defaulted, and another 30 currently are delinquent. That makes your “best-case” default rate 5 percent. To determine your “worst-case” default rate, add the 10 defaulted borrowers to the 30 delinquent borrowers — which would represent a default rate of 20 percent.

You also could determine the average number of borrowers who are defaulting each month. This step allows you to project what your cohort default rate would be if that trend continues.

Here’s another example. Ten borrowers from your cohort of 200 borrowers currently have defaulted. If you are averaging one defaulted borrower per month, and there are 12 months remaining in the cohort default rate period, then you are likely to have 12 more defaulted borrowers. That would bring your total number of borrowers at the end of the cohort default rate period to 22 — which translates to a default rate of 11 percent, slightly higher than your 10 percent goal.

5. Which borrowers are likely to default?
Determine the characteristics of the borrowers who already have defaulted to help identify borrowers who are at risk of defaulting in the future. Understanding who’s most likely to default helps you focus on those who are likely to need the most repayment help.

6. What percentage of the 2013 portfolio currently is delinquent?
Delinquent borrowers are a target audience for borrower outreach. And the lower the percentage of delinquent borrowers, the better the borrowers in the portfolio are performing in successfully repaying their loans.
You already may have determined how many borrowers are delinquent as you were figuring your projected cohort default rate. The percentage of the cohort that these delinquent borrowers represent is a good indicator of how your portfolio is performing. A delinquency percentage of greater than 50 percent would put your portfolio at high risk of exceeding a 30 percent default rate.
If your 2013 portfolio of 200 borrowers currently has 80 who are delinquent, for example, that means your current delinquency rate for the cohort is 40 percent.

Analyzing your cohort data helps you set expectations, identify trends, develop goals, inform future default prevention efforts — and, most importantly, establish the best ways to keep students on the path to successful repayment.


Visit the USA Funds® website at www.usafunds.org if you need assistance with cohort management, borrower outreach, and financial literacy and student success training.

Campus-Wide Commitment, Analysis Top Default Prevention Tips

Submitted by: Shannon Cross, USA Funds Account Executive

A report issued over the summer looks at default prevention strategies at community colleges. But the report’s findings and recommendations highlight best practices that all types of institutions should review and consider implementing.

“Protecting Colleges and Students: Community College Strategies to Prevent Default,” from the Association of Community College Trustees and The Institute for College Access & Success, lists the following recommendations for colleges:
  1. Embrace default reduction as a campus-wide endeavor. “Confining default reduction efforts to the financial aid office makes little sense given both the relationship between default and student success and the importance of federal aid eligibility to the institution as a whole,” the report says.
  2. Analyze who borrows and who defaults. “Protecting Colleges and Students” says, “Data analysis can uncover the unique characteristics and behaviors of a college’s population, and help target services towards the borrowers who need them most.”
  3. Provide counseling and information to borrowers when they need it. Your data analysis should guide the tactics you use for borrower outreach, the report advises.

I recommend a life-of-the-loan approach to borrower counseling and outreach. Based on what your data analysis indicates could be most effective, your work can range from messages in weekly school bulletins and kiosks on campus, to in-person exit counseling, to targeted outreach by phone and email once borrowers leave.


Visit the USA Funds® website at www.usafunds.org if you need assistance with cohort management, borrower outreach, and financial literacy and student success training.