The challenge: Recover charged-off debt and qualify students to resume their studies
Sometimes the path to higher education has roadblocks, like overdue student loan payments. Student loan defaults often result from life uncertainties, such as changing economic tides or priorities. Our client, an enterprise for-profit, national university, saw an opportunity to get students back on a learning track by offering repayment plans to cure their loan defaults. But unlike traditional credit granting agencies, universities are not equipped to manage debt recovery, so they turned to Firstsource for help.
The university sought a partner that could bring resources, experience and a customer service culture to the help them solve their challenge. It views debt recovery less as an income-generating activity and more as a bridge-building opportunity.
The solution: Rebuilding student relationships through empathetic debt recovery
We deployed our Receivables Management solution that combines advanced analytics and the human touch to initiate empathetic conversations with students about repayment options for their debt.
The university’s SVP of Default Servicing selected Firstsource, one of two agencies retained, for its receivables management experience. Its mission: perform debt recovery on charged-off accounts. Students were coached on their obligations and the benefits of resolving their debt: Bringing student loans current entitles them to reapply to the university or obtain transcripts that enable them to continue their education at another university. Resolving the debt was presented as a win-win scenario.
Accordingly, all associates assigned to this client demonstrated empathy and sensitivity for the students’ circumstances, which is required for gaining their trust and confidence and resolving the default. All student contact was made by telephone to build rapport. Associates were guided by metrics that predict the dates and times most convenient to reach students. This approach did not require any direct management oversite by the university – Firstsource acts independently, while providing continuous reporting and feedback to the client.
“Our focus is always on protecting the brand of the university and demonstrating empathy towards the students – the client’s leadership was completely aligned with that goal, ” explained Anthony Balon, Vice President Operations, Firstsource. “The huge recovery rate achieved is a testament to the effectiveness of this approach”.
The outcome: Enhancing brand reputation while improving recoveries
Firstsource has been working with this client for over 10 years, with a track record of on-going success. The University has recovered $7M in debt through more than 110,000 charge-off cases. Because the associates working with the students demonstrated empathy and understanding, very few complaints were recorded by the university. With daily operations managed completely by Firstsource, the client was able to focus on more strategic initiatives.
The client is so pleased with the results to date, they have asked Firstsource to continue the program and expand the approach. University students are comfortable using technology, so introducing digital debt recovery is a natural next step for this client. Providing multi-channel communication options, a self-service web portal for creating custom repayment plans and around-the-clock access will further enhance student engagement and debt recovery performance.