As student loan debt has surpassed $1.1 trillion new government data reports about a third of borrowers are delinquent at least five days. This development has many in the government and education world shifting to adapt. Similar changes have been taking place in the collection world. While the debt to be collected is plentiful, the hoops to jump through to collect it are numerous. In this issue’s Agency Spotlight, Collection Advisor talks to RGS Financial’s CMO Paul Gauerke about how he and RGS’s president Michael Ryalls use a hands-on approach to manage their agency’s collection efforts. Gauerke also reveals a useful tactic to landing a Department of Education contract.
How did you become involved with RGS Financial and collections?
RGS was started in early 2005 by Michael Ryalls and myself. We had almost 20 years of experience each in the collection and lending industries prior to starting the company. We bought some assets of a very small agency based in Dallas that was winding down its operation. Mike’s background is primarily on the creditor side running large-scale operations in auto finance and credit card. Mine is on the sales and marketing side of the first and third-party agency world.
Leading up to that, we could sense a change in the industry and a need for a consumer and client-centered collection agency that places a high priority on being the problem solvers, not the problem creators, for both consumers and clients.
What is something RGS Financial does to ensure things run smoothly in upper management?
Organizationally, RGS was built and is run by owners who are actively involved in all the day-to-day aspects of running the business. The industry is evolving and no longer is just about the dollars collected, it is evolving to the point where compliance and data security are just as critical to an agency’s success. We believe it takes upper management and ownership’s active involvement to make sure we stay on track.
We have weekly director meetings with all of the directors to make sure any key initiatives from each business unit are being met. Mike and I are owners. Our COO and CFO also have small ownership shares in the organization. We try hard to make sure that we are involved in all aspects of the organization.
In student loan collections, this can be many consumers’ first brush with debt. What advice would you give collection professionals for handling these kinds of accounts?
Probably the biggest issue in working with “first time” consumers is education and making sure we are good listeners. Our agents and managers are trained to explain to the consumer who we are, why we are calling, learn about the consumer’s situation by asking some key, pertinent questions and then answering any questions the consumer has about the debt, potential solutions and any other information they need. The last step in the process is negotiating a solution with the consumer that will work for them and is acceptable to our client.
What is something an agency might do that would guarantee failure in student loan collections?
In today’s world, certainly compliance with all federal and state laws is at the forefront for all agencies. It does not take long for an agency that does not comply to gain a reputation that can be very damaging, especially on the Department of Education contract.
What are some special compliance considerations for student loan collections?
On the Department of Education contract it revolves around making sure all the documentation to support the “reasonable and affordable” rehabilitation opportunities is secured from the student borrower. There is an increasing amount of documentation required to support that the rehabilitation schedule is in compliance with the terms and conditions set out by the Department of Education.
How was RGS selected to work on the Department of Education contract?
We have been a Department of Education subcontractor since 2008. We were selected based on our aptitude for compliance, attention to detail and the references we provided regarding how consumers were treated when they were contacted by RGS.
How would an agency get started collecting student loan debt?
A way to get in a Department of Education contract in particular is to have a special designation. If you are a small business, there is a requirement in the contract that they need to contract a certain percentage of their business to a small business. RGS Financial is a designated small business; we meet the criteria defined by the contract of the small business subcontractor. A business can also be designated as disabled veteran owned, veteran owned, minority owned, or woman owned. Your business can also be in a help zone if you meet the qualifications for that. There is a lot less out there than is needed to fill those particular criteria on the contract.
Are there any games or morale boosting practices RGS uses to keep collectors happy and productive?
Yes, we are continuously running monthly contests to keep our agents focused and motivated on achieving the goals set out by upper management as well as those set out by our primary contractor. We try to do things like a Thanksgiving dinner giveaway for a couple of families each Thanksgiving. We run things this time of year like March Madness with the bracketology. Anything to keep them interested and motivated. You might get rewarded for 100% attendance. We have a top collector award ceremony each month that recognizes top collectors on different teams. We have drawings for agents who receive compliments from consumers where they are eligible for cash prizes as well. We try to mix it up to keep it fresh and keep them energized and focused.
What has RGS Financial done to guarantee success in today’s competitive collection industry?
We challenge our executives, managers and agents to constantly look at ways we can exceed client goals, improve our overall efficiency while always adding value for our clients. One of our stated core beliefs at RGS is that we exist to help our clients exceed their collection goals by establishing working relationships built on professionalism, trust and twoway communications. We also challenge our agents to establish that same type of relationship with the consumers they interact with.
We believe a big factor in our success is the open and honest communications we have with our clients. This ongoing interaction helps us to understand their goals and then allows us to try to match our human resources, experience and collection tools that best fit their particular project. Our stated goal is to perform at the highest level of collections, and to give our clients unsurpassed customer service that is second to none.
How is RGS Financial involved in the community?
We are active with a number of nonprofits in our area including the United Way and the North Texas Food Bank. We have done a series of successful fundraisers rewarding agents with casual dress days for raising donations. There are different walks sponsored by different nonprofit organizations. We’ve participated in a number of those over the years as well. One in particular, one of our agents passed away in 2010. We did a walk on her behalf as a fundraiser for her family.
We feel a responsibility to give back to the community where our employees live. If there is an illness or a nonprofit someone is very passionate about because of either a close relative or something they have been involved with, we feel it is important to support those whenever we can.
What do you enjoy doing in your free time?
Both Mike and I have families of three boys, Mike’s are 8, 10 and 11, mine are 12, 14, and 16. Basically all our free time revolves around sports and other family activities the boys are involved with. Not much “free time” for either of us!