Sallie Mae 2012 Annual Report Download - page 8

disclosure that provides very specific information about the loan’s terms with instructions on how to accept the
terms of the loan. When a customer accepts the terms of the loan, we send a disclosure that confirms the loan
information and also notifies the customer of a right-to-cancel period.
Additionally, we provide information to customers during the application process to allow them to compare
the full cost of different repayment plans. We also provide a 60-day loan cancellation period within which
customers have the ability to repay their loans after disbursement with no interest or fees should a customer
change his or her mind.
Our Approach to Assisting Students and Families in Repaying their Education Loans
In 2012, Sallie Mae serviced loans for approximately 3.2 million Private Education Loan customers, as well
as approximately 10 million federal education loan customers who received loans through either the DSLP or the
previously existing FFELP program. We receive approximately five million customer contacts every month
(calls, written communications, and customer requests) in our call and servicing centers or through
SallieMae.com and process nearly 70 million customer payments on an annual basis.
We understand managing repayment of education loans is critical for students to achieve their educational
goals, recognize their full earning potential, and develop a strong credit profile. As previously described, the first
step to helping customers repay their Private Education Loans is making sure they have access to the information
and products to understand, plan and pay for the full cost of attaining a college degree. Our underwriting focuses
on the customer’s ability, stability, and willingness to repay the loan.
The second step is making sure our customers maintain a full appreciation of their loan terms and repayment
responsibilities throughout the life of their education loans, not just at origination.
• Our Smart Option Student Loan product promotes in-school repayment. By making in-school payments,
customers stay informed on loans, learn to establish good repayment patterns, and graduate with less debt.
• Before, during, and after leaving school we also provide clear, concise, and frequent market-leading
communications designed to help customers successfully understand, manage, and reduce the costs of
Private Education Loans. We use a variety of tools, including letters, emails, videos, text messages,
monthly statements and 24/7 secure online account access and information on our website,
SallieMae.com. Each communication channel provides customer support.
• Another important tool we provide our customers is our Office of Consumer Advocate (“OCA”).
Established over 10 years ago, OCA provides specialized customer assistance and positive resolutions to
escalated concerns. OCA now also serves the additional role of addressing all of the customer inquiries
we receive via the student loan complaint portal the CFPB established in 2012. In fiscal year 2012, OCA
received 1,382 inquiries from our customers through the newly established CFPB portal, representing
approximately 0.04 percent of our Private Education Loan customers. As of January 31, 2013, 99 percent
of those inquiries have been successfully reviewed and closed.
The third step is providing the right incentives and programs to reward and encourage repayment and aid
those individuals and families who may be struggling to meet their financial obligations. We work with each
individual to understand their financial situations and identify alternative payment arrangements.
• Sallie Mae provides the opportunity for customers to qualify for “borrower benefits” in the form of reduced
interest charges for actions such as signing up for automatic withdrawal or achieving a sufficient history of
consecutive on-time payments. These benefits exist to encourage better customer payment behavior.
• We have instituted a twelve-month rate reduction program to assist customers struggling with repaying
their Private Education Loans. We offer this program when there is a possibility to keep a customer
current in their monthly payments by a temporary reduction in the interest rate and, in some cases,
modification of term. Most participants successfully complete the program and return to current
payments.
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