Portfolio Management
Healthier borrowers, better performing portfolios
Not all guarantees are created equal. When you partner with American Student Assistance, you get more than a federally required guarantee of reinsurance in cases of default. Instead, you receive our guarantee of commitment to the financial wellness of every borrower in your portfolio. And our wellness approach goes far beyond mere default prevention. We’re taking proactive steps, from the application process to the last payment, to help borrowers successfully manage their higher education debt as part of an overall healthy financial lifestyle.
Our portfolio management activities include:
Best practices in positively affecting borrower behavior
American Student Assistance is one of the few guarantors in the country to have a special Voluntary Flexible Agreement with the U.S. Department of Education. Under the VFA, ASA has been granted the latitude to experiment in best practices for positively influencing borrower repayment behavior. The VFA aligns our federal financial incentives with our business model, rewarding us for proactively helping students manage education debt, rather than reinsurance and debt recovery. So our success is tied directly to the success of our lenders’ portfolios.
Portfolio analysis and segmentation
Some borrowers are going to need more of a helping hand than others when it comes to managing the repayment process. ASA uses sophisticated risk assessment tools, scoring models, and analyzation techniques to identify those segments of our portfolio most likely to require additional outreach and assistance.
An eye toward expanding markets
ASA understands the makeup of our portfolio. With the help of our market research analysts, we can direct our focus to those emerging student populations that are growing within the industry. Recent studies have identified two particular groups that have become important sectors for portfolio expansion: Hispanic student borrowers, and attendees of Christian colleges.
The number of Hispanic student borrowers is growing, particularly in the south and southwest US. Since the Hispanic middle class is also growing, more and more students are opting for four year colleges, as opposed to the more common two year schools.
Christian colleges are another opportunity for portfolio expansion. The statistics prove that these schools are expanding rapidly. The Council for Christian Colleges and Universities (CCCU) has seen enormous growth in student population of their schools, boasting 67% higher enrollment rates than in 2002. Compared to national averages, CCCU schools have higher retention rates, lower tuition costs and lower default rates.
| Category | Fall 1992 | Fall 2002 | % Change |
|---|---|---|---|
| All Institutions | 14,487,359 | 14,791,224 | +2.1 |
| Public | 11,384,567 | 11,309,399 | - .7 |
| Private | 3,102,792 | 3,481,825 | +12.2 |
| CCCU Institutions* | 128,842 | 215,593 | + 67.3 |
Source: U.S. Department of Education. National Center for Education Statistics. Digest of Education Statistics, 2002. Washington, DC: 2003.
* For the purpose of accurate comparison, CCCU enrollment data includes only the ’03 U.S. member campuses.
Comparison of Council for Christian Colleges and Universities enrollment between Fall of 1992 and Fall of 2002.
Through our analysis and knowledge of the terrain of the current and evolving student loan market, ASA forges relationships with lenders and borrowers that benefit all.
To learn more about this important emerging market, and ASA’s plans for its lenders, please contact Robert Cole, Director of Business Development, at rcole@amsa.com.
