# Presentation: 436461

## Boston Summit Borrower Services – Collections Update

- Gary Hopkins
- Director
- Collections Group

- August, 2005

## Default Portfolio Sizes

**	****	****Combined****	****	****	****GA’s****	****	****FSA**
**FY00 - $28.6 Billion****	****	****$17.0 B****	****$11.6 B**
**FY01 - $28.8 Billion****	****	****$16.9 B****	****$11.9 B**
**FY02 - $29.1 Billion****	****	****$16.4 B****	****$12.7 B**
**FY03 - $29.1 Billion****	****	****$15.1 B****	****$14.0 B**
**FY04 - $30.2 Billion****	****	****$14.3 B****	****$15.9 B**
**FY05 - $30.9 Billion****	****	****$17.4 B****	****$13.5 B****	**
***	***
***	***

- August, 2005

## Default Recoveries

**	****	****Combined****	****	****	****GA’s****	****	****FSA**
**FY00 - $4.6 Billion****	****	****$3.3 B****	****$1.3 B**
**FY01 - $5.1 Billion****	****	****$3.7 B****	****$1.4 B**
**FY02 - $5.1 Billion****	****	****$3.8 B****	****$1.3 B**
**FY03 - $5.4 Billion****	****	****$3.8 B****	****$1.6 B**
**FY04 - $5.6 Billion****	****	****$3.8 B****	****$1.8 B**
**FY05 - $5.8 Billion*****	****	****$3.7 B****	****$2.1 B****	**
***	***
***	*******Projected***

- August, 2005

## Default Recoveries

**FY 05 Totals **(as of July 31)
**GA - $3.08 Billion ****(-1.0%)**
**ED - $1.75 Billion ****(+14.5%)**
**Combined - $4.84 Billion ****(4.07%)**
**	**

- August, 2005

## Default Collections

**Projected Totals for FY05 Year-End**
**GA - $3.75 Billion**
**ED - $2.05 Billion**
**Combined - $5.8 Billion**
**	**

- August, 2005

## Combined Collection Tool Utilization

- FY2004  Balance of Tools	GA		ED	Combined
- Direct Loan Consolidation	45%		10%	     35%
- Regular Collections		14%		25%	     17%
- Rehabilitation			20%		32%	     24%
- Treasury Offset		  8%		21%	     12%
- Wage Garnishment		  9%		10%	       9%
- FFEL Consolidation		  4%		  2%	       3%

- August, 2005

## Combined Collection Tool Utilization

- FY2005  Balance of Tools	GA		ED	Combined
- Direct Loan Consolidation	44%		  8%	     31%
- Regular Collections		14%		21%	     17%
- Rehabilitation			21%		36%	     26%
- Treasury Offset		  9%		23%	     14%
- Wage Garnishment		  9%		11%	     10%
- FFEL Consolidation		  3%		  1%	       2%
- **Through July 31, 2005*

- August, 2005

## Guarantor Judgments

- Guidelines for FY06:
- All Judgments that would otherwise meet the mandatory assignment criteria should be reported in Line MR31 on Forms 2000.
- Assignment of Judgments:
- Pilot for assigning judgments to DOJ will commence
- New York, Texas, New Jersey will Participate
- All agencies not eligible for DOJ assignment will work directly with ECMC to assign accounts to their portfolio.

- August, 2005

## Collection Cost Calculations

- 	682.410(b)(2) Collection charges: ...the guaranty agency shallcharge a borrower an amount equal to reasonable costsincurred by the agency in collecting a loan on which the agencyhas paid a default or bankruptcy claim. These costs mayinclude, but are not limited to, all attorney's fees, collectionagency charges, and court costs. The amount charged aborrower shall equal the lesser of--(i) The amount that would be charged for the costs ofcollection under the formula in 34 CFR 30.60; or(ii) The amount the same borrower would be chargedfor the cost of collection if the loan was held by the U.S.Department of Education.

- August, 2005

## Collection Cost Calculations

- 682.410(a)(2) loosely lists items that can be used to determine actual collection costs.
- Costs should be calculated annually.
- Once costs have been determined then should be utilized in “make whole” formula stated in 34 CFR 30.60.

- August, 2005

## Collection Cost Calculations

- “Make Whole” Formula”:
- 1 / ( 1 – CR)
- Example:	1 / ( 1 – 20%) = 1.25
- Payment-in-full:
- P&I = $10,000 x 1.25  =  $12,500 (Costs - $2,500)
- Single Payment:
- $250 payment:	Costs = $50 (20%)
- $200 applied to P&I

- August, 2005

## Summary\Questions

- Gary Hopkins
- 202-377-3208
- gary.hopkins@ed.gov
- 	http://www.fsacollections.ed.gov/

- August, 2005