By Lissa Powell, USA Funds Regional Training Executive
You received your school’s draft 2011 three-year cohort default rate. Now what?
There are a variety of steps to consider for preventing student loan default and managing default rates, some short-term and others long-term. And USA Funds® can help you with both types of strategies, which I discussed with more than 100 participants in a recent “Default Prevention Best Practices” webcast.
Today let’s start with a short-term strategy: challenging your school’s draft cohort default rate. Then, in an upcoming story in USA Funds Higher Education Success News, I’ll share strategies that can help you in lowering future cohort default rates.
Schools with low cohort default rates enjoy benefits — from positive reputation to loan disbursement waivers. Schools with high cohort default rates risk a negative perception of their administrative capability — and the loss of eligibility for federal loan and grant programs. USA Funds University offers an online course that explains cohort default rates and their impact.
But even as you note the importance of a low default rate, keep in mind: Just because you can challenge your school’s draft rate doesn’t necessarily mean you should. Consider these three key questions to help guide your decision:
1. What is the potential impact of the challenge?
If your school’s rate is low and you have many files to review, will the potential benefits be worth the time and effort? Is there a certain default rate goal that taking the time to challenge might help you reach?
2. What are the time constraints?
You have 45 days to submit your challenge, which means you have until April 11, 2014. Financial aid offices often are stretched thin, especially as you move into processing for the upcoming award year. Think through the other tasks you’ll have during this period and whether those commitments will allow you the time you’ll need to devote to a challenge.
3. What are your available resources and staff?
Who will work on the challenge? Is there someone you can pull away from another assignment? If you have a staff member who specifically handles default prevention, that person might be the most likely to tackle the job. If you use USA Funds Borrower ConnectTM or USA Funds Borrower Connect InTouchSM, you can access a tool that will help you analyze your draft data. Contact USA Funds to learn more.
If you’d like to find out more about cohort default rates and challenges — as well as strategies for default prevention — watch the recording of last week’s webcast.