To assist student borrowers, the Michigan Guaranty Agency (MGA) partners with Student Assistance Corporation (SAC) to contact high-risk borrowers (i.e., those borrowers that withdrew, dropped to less than half-time, as well as proprietary and community college graduates, or other criteria as defined by the borrower's institution). MGA provides this service as the borrowers' advocate to help them stay current on their repayment agreements with their lenders to prevent delinquencies.

Shortly after a student borrower leaves school, SAC will contact the borrower through a series of letters introducing SAC along with a telephone number to call if the borrower has any questions or needs information about their student loan. The letter informs the borrower they will soon enter repayment and stresses the importance of repaying their student loan. It also informs them that SAC will contact them by telephone to advise them of their rights and responsibilities, answer any questions they may have in regard to their student loan, and discuss repayment, deferment, and postponement options.

Telephone contacts involve courteous SAC staff announcing they are calling on behalf of the Michigan Guaranty Agency and in reference to the borrower's student loan and the institution they attended when they received the loan. They inform the borrower they are currently in a grace period, that they will soon need to start repaying their student loan, and that they should receive information from the loan servicer. SAC staff will then verify enrollment and employment information along with demographic information. They will inform the borrower of the servicer of the loan(s) and provide telephone numbers and addresses for the servicer(s). If necessary, SAC will contact the servicer for additional information or clarification. If the borrower is eligible for deferment or forbearance, SAC will send the proper forms. A telephone number to contact SAC is provided at the end of the call.
  

Student Assistance Corporation (SAC) provides default prevention services for the Michigan Guaranty Agency's (MGA) student loan and parent loan accounts. SAC's services begin when MGA receives a Default Aversion Assistance Request from a lender for a student loan borrower whose account is more than 60 days delinquent. Please find below an overview of SAC's operations as well as some key performance measurements specifically relating to the MGA portfolio.

A team of Default Prevention Specialists is assembled to specifically handle the MGA portfolio; a Supervisor of Operations manages the workgroup to achieve optimum default and cure rates on MGA's behalf. The team's hours of operation are 8:00 a.m. to 8:00 p.m. Monday through Thursday and 8:00 a.m. to 12 noon on Fridays and Saturdays. Customers are served by SAC's Default Prevention Specialists who help student loan borrowers resolve their delinquencies in the quickest and most strategic manner possible.

SAC voluntarily complies with the Fair Debt Collections Practices Act (FDCPA) when communicating with MGA student loan borrowers. The FDCPA regulates the content of phone calls and calling times as well as mandates that SAC staff be tested annually on FDCPA-related subjects. The "Mini-Miranda" is given on all calls to inform borrowers that SAC is calling in relation to a collection of debt.

SAC strictly adheres to a once-and-done business philosophy in which SAC focuses on long-term debt management resolutions instead of "quick fixes" for student loan delinquencies. SAC is as interested in "future delinquency prevention" as much as it is in "default prevention." To support this mission, SAC encourages borrowers to make use of long-term debt management solutions to keep student-loans current for the duration of the repayment cycle. Options such as monthly automatic debits, alternative repayment schedules, and loan consolidation are solicited to achieve this long-term account maintenance. SAC is currently piloting a program where it takes checking account payments via telephone for certain lender clients.

SAC also works toward the quickest route to account resolution by encouraging immediate up-to-date payments preferably made over the phone or in the case of "paper cures," like requests for deferment or forbearance, SAC encourages using e-mail and faxing to ensure the most expeditious resolution. SAC utilizes highly sophisticated technologies to manage its fax and e-mail traffic. Delinquent accounts in MGA's portfolio receive several dunning letters and telephone calls until the loan is brought completely up-to-date. SAC deeply penetrates the MGA portfolio ensuring that accounts receive the proper attention to ensure default aversion.

For those hard-to-find borrowers, SAC employs traditional and progressive skip-trace techniques. These techniques include calling personal references and archived telephone numbers as well as accessing data warehouses and various search engines. If SAC's internal skip-trace efforts prove futile and the borrower is not located, SAC will then outsource its skip volume to agencies that will perform another degree of skip tracing.

Key Success Measurements

• With SAC's assistance, MGA prevented over $725 million of potential student loan defaults in 2007!
• The Default Prevention Specialists who work on MGA's behalf successfully resolve more than 89 percent of all delinquent loan accounts submitted by lenders and servicers.