July/Aug. 2009

Student Loan Collections: Specialized Training 'Critical'

By Cindy Pickett

In order to gain secure employment and pursue the American Dream these days, obtaining a college degree, some would argue, is mandatory. We encourage our children from the time they can talk to think about what they want to be when they grow up. When they get a little older, we ask them where they are going to college to make that happen. 

Today, 65.7% of college educations are obtained through the help of student loans. Without these loans, going to college would not be an option for many students.

Recent graduates with an average student loan debt of $19,723 might be talking to collection officers as well as looking for jobs. Since 1981, Iowa Student Loan Liquidity Corporation has helped more than 300,000 Iowa residents obtain college educations while guaranteeing that the student loan business, its associated jobs and the related earnings remain in the state of Iowa.

Todd Tallman is the Collections Operations Manager for Iowa Student Loan Liquidity Corporation. Tallman's experience in the collection industry spans 17 years and ranges from collecting consumer and commercial debt (including some door knocks and repossessions) to wireless communication collections to skip tracing and legal recovery. He has even spent time as a licensed private investigator.

We asked Tallman to educate us on the options available when outstanding student loan payments are not up-to-date.
 
How did you get started in the student loan collection industry?
I heard about my current position from a contact, acted on the opportunity and was hired. I started in the industry about four years ago, but prior to that, I had no experience in student loan collections.

How much specialized training is needed in the student loan market?
After being hired for my current position, I spent 12 weeks in an intensive in-house training program, where I learned everything from customer service on up. Specialized training is critical to succeeding in student loan collections because of the complexity of federal student loan programs. Ongoing training is also a must.

What additional knowledge is useful for student loan collections?
A genuine desire to help others is always useful in the collection business, but the ability to communicate with 20- to 30-year-olds is the most effective tool you can have for the industry.

How does your company enhance student loan collection efforts?
We contact our customers before they enter repayment to determine if they can afford their payments. If they need help, we try to provide it. We focus on budget worksheets, financial literacy and working with our customers to help them increase their income and decrease their debt.

What enforcement tools are used in student loan collections?
The tools vary based on several factors, such as the type of loan being collected and the entity doing the collecting. Guarantors of federal loans have some unique enforcement tools available to them, such as administrative wage garnishment.

When does a loan consolidation program make sense for a borrower?
That depends on each borrower's circumstances. In some situations, borrowers might be able to reduce their monthly payments. However, it is possible borrowers could end up paying more interest over the life of their loans, so it's important that borrowers fully investigate and carefully consider all their options before deciding whether to consolidate their loans.

When does a borrower have the right to rehabilitate the loan under the regulations outlined in the Higher Education Act?
The specific guidelines for rehabilitation vary by loan type, loan program and other factors. Generally speaking, if a borrower makes a series of full, on-time payments within a defined period of time, then that borrower may be eligible for rehabilitation.

When do student loan collections require litigation?
Regardless of the type of collections, in my opinion, litigation should only be considered as an absolute last resort when all other options have failed.