By Lissa Powell, USA Funds Regional Training Executive
As you evaluate your school’s draft 2011 cohort default rate, you may be seeking ways to improve your rate — now and in the future.
In a recent “Default Prevention Best Practices” webcast, I discussed with the more than 100 participants steps to take to lower cohort default rates. In last week’s USA Funds® Higher Education Success News, I shared information from that webcast about challenging draft cohort default rates, to potentially lower your school’s official 2011 rate in the fall.
Today, let’s take a longer-term look.
Often a proactive approach, emphasizing debt management and student success, is a more effective way to keep your default rates low. By working to prevent default, you’ll help your school enjoy the benefits of a lower cohort default rate — while also helping the students you serve to avoid the consequences of default.
Here are tips, gathered from USA Funds and the U.S. Department of Education, that can help you ensure your students repay their loans and succeed in their postsecondary education or training:
- Communicate with borrowers at key decision points. From counseling and orientation to ongoing communication and online tools, tailor your default prevention tactics and messages according to each borrower’s specific stage in the life of a student loan. Those stages are: application and the first 90 days; in school; final year and program completion; and post-graduation.
- Introduce financial literacy programs. The Department recommends that schools teach students about debt management strategies and tools, loan repayment options, and the potential income for their chosen fields. USA Funds offers financial literacy training tips in our Teachable Moments for Personal Finance Education guide.
- Maintain communication across campus. Default prevention is not the responsibility of the financial aid office alone. Communicate with other departments on campus about the impact of cohort default rates and the importance of collaborating to manage those rates. Then develop a default prevention plan to guide your team effort.
- Focus on retention and student success. More than 70 percent of defaulted borrowers left school without earning degrees, so consider having dedicated default prevention and retention staff members who focus on fostering student success. Your goal should be to provide services that students will need — even before they know they need them.
- Employ early identification and counseling for at-risk students. Analyze borrower data to determine which students at your school are most likely to default, and develop interventions that will address their specific barriers to success. Because the majority of those who default are those who withdrew — and typically within their first three terms — default prevention and debt management should begin when the student first walks in the door at your school.
- Use timely and accurate enrollment reporting. Performing this regulatory requirement helps ensure that borrowers can take advantage of their full grace period before entering repayment, and that they receive repayment assistance that is timely and appropriate.
- Review NSLDS and repayment information to ensure accuracy. Regulations also call for regularly checking report, enrollment and repayment information in the National Student Loan Data System. These reviews verify that the Department’s cohort default rate data for your school is accurate — and put you a step ahead when preparing draft rate challenges.
- Maintain contact with former students. Encourage those who withdrew from school to return to complete their academic programs. Conduct borrower outreach, ideally starting during each borrower’s grace period, to ensure successful repayment.
USA Funds offers a variety of resources to help with your default prevention efforts. Contact USA Funds to learn more about our default prevention tools and solutions. And watch the recording of the “Default Prevention Best Practices” webcast for more details about cohort default rates and preventing default.