# Presentation: 708387

## Best Practices Debt Management

- George Covino
- EAC
- November 2002

## Agenda

- “I wish I’d thought about it...but, I’m doing public sector work afterwards, so I’m still paying a $700 school repayment and I’ll be getting around - my starting salary should be anywhere from $40 to $60,000.  That makes it very tight for me...”
- 	*Focus Group Participant*
*	**USA Funds,, 2002*

-     Current Situation
-  Group Exercise
-      Best Practices
-   Q & A

## Current Situation

## Current Situation

- U. S. Department of Education National Cohort Default Rates

## Current Situation

- FY 2000 National Default Rate
- 6,450 schools
- 142,378 borrowers in default
- 2,399,774 borrowers in repayment
- 5.9% cohort default rate

## Current Situation

- FY 1998 Federal cost of FFELP
- Total cost - $6.4 billion
- Cost of default - $3.19 billion

## Current Situation

- NELLIE MAE Undergraduate Students and Credit Cards, 2002
- 83% of undergraduate students have at least one credit card
- Average balance is $2,327
- Graduating students have an average of $20,402 in combined education loans and credit card balances

## Current Situation

- NELLIE MAE Graduate and Professional Borrowing, 1999
- High debt burdens not always offset by comparably high salaries
- Most graduate borrowers report feeling “very burdened” by their student loan debt
- 22% report using 1/5th monthly income to make student loan repayments

## Current Situation

- NELLIE MAE 2000 Credit Card Usage Analysis, 2001
- Average number of cards - **4**
- Average credit card debt - **$4,776**
- Percentage with balances between $6,000 - $15, 000 - **20**
- Percentage with balances exceeding $15,000 - **6**

## Current Situation

- Alternative loans
- Troubled economy
- Uncertain employment
- Threat of war
- Other issues?

- “Not having enough loan money to even pay for tuition...it’s very expensive and we have to take out the max, it doesn’t cover tuition.  So I find myself taking out private loans, which is increasingly bad...”
- 	*Focus Group Participant*
*	**USA Funds,, 2002*

## Best Practices

- Identify one or two good ideas you use at your institution/organization
- Share them with your group
- Group reports on “Best Practices”

## Best Practices

- UCLA Medical School
- School-wide commitment to financial literacy
- Hi tech-hi touch approach
- Creativity and awareness
- http://www.medsch.ucla.edu/

## Best Practices

## Best Practices

- Nellie Mae FinMan
- E-mail and web-based program
- Topics
- Budgeting
- Managing credit
- Taxes and retirement
- Salary projections and loan repayment
- https://www.nelliemae.com/finman/index.html

## Best Practices

- Unlock The Future
- Best Practices in Student Retention
- Life Skills
- 2003 Symposium
- Default Management System (DMS)
- Graduate Professional Life Skills
- http://www.usafunds.org

## Contact Information

- George Covino
- gcovino@usafunds.org
- 760-322-9752
- www.usafunds.org

*“*I think preventative information is clearly, in my mind, called for.  Kind of like a “scared straight” thing, but before people go bad.  As in giving more specific information as to what the repayment schedules are specifically for people - sitting down and actually talking to them about it.”
- 					*Focus Group Participant*
*	**	**	**	**	**USA Funds,, 2002*