When COVID Forbearance Ends, Delinquent Rates Could Hit 70%
If the government grants no additional extensions, in January 2021, student loan repayment will enter unchartered territory. What will happen when ALL borrowers exit COVID forbearance simultaneously, and payments will resume? History can provide us with clues on what to expect.
For example, before COVID, an astounding 68% of all student loan borrowers became delinquent MORE THAN ONCE in a cohort default rate. Based on that historical data, it’s a tiny leap for experts to anticipate that nearly 70% of all student loan borrowers are likely to be delinquent at the end of the COVID forbearance in January 2021.
Consider all the financial difficulties and worries you have experienced during the pandemic, and then imagine yourself in the shoes of these borrowers. Most student loan borrowers have little experience managing money, and many will have dealt with job losses or pay reductions. The COVID forbearance provided breathing room for all borrowers’ budgets. But in January, after nine long months of not paying a dime, borrowers will need to adapt to the large chunk of their funds that must be used for payments. Sadly, many will fail and fall behind.
To successfully resume payments, these borrowers need expert advice before they fall behind. Some need to talk with a caring expert about their situation's specifics to receive sound advice on finding the best option for their situation.
If we service this cohort using the old methodology our chances of success are very low. The strategy for an effective post-COVID default prevention plan must evolve to be more robust and proactive than pre-COVID plans.
Are you willing to gamble on your future participation in Title IV federal funding? You are not in this alone. Champion can help. We can help you develop a winning strategy for this challenging situation. Our experience and excellent track record will provide your school with the security of know your Title IV funding is protected. We have:
86% Recovery Rate
Champion has one of the highest recovery rates in the default prevention industry.
12% Delinquent Rate
Our skip-tracing methods have consistently achieved low delinquent rates.
Historically, we’ve dropped delinquent rates over 50% six months after taking over a portfolio.
31 Years Experience
Trusted industry leader implementing strategies to cut student loan default rates since 1989.