By Vicky Keller, USA Funds Consultant
One large school had just six students show up at a campus-wide financial literacy presentation a few years ago, and four of them were employees of the financial aid office.
Another, smaller school struggled with a high cohort default rate and faced the prospect of federal sanctions. The financial aid office worked diligently to lower the rate but wasn’t making gains on its own.
Both institutions — schools I work with as a USA Funds® consultant — turned things around using a variety of approaches that stress borrower outreach before, during and after students are on campus. And their financial aid offices played a large role in their debt management and default prevention successes.
But those schools’ financial aid offices weren’t alone in their efforts.
The schools not only adopted the best practice of regular borrower communication, but they also got help from others in doing so. They realized that the most effective default prevention strategies are those that involve the entire campus.
In a recent presentation to leadership from Historically Black Colleges and Universities, as part of a United Negro College Fund event, I stressed the importance of regularly communicating with borrowers about financial literacy, debt management and student success. And I urged campus leaders to spread that message to faculty, staff and students throughout their institutions.
All hands on deck
At the school with the poorly attended financial literacy event, financial aid staff joined others on campus to get out the word about the next workshop. Instead of only displaying a poster in the financial aid office, as they had previously, they got students interested in attending by also enlisting faculty to offer extra credit for attendance, calling on graduate students to pass out fliers and talk about the event, and asking the campus radio station to spread the word.
The next campus-wide financial literacy workshop drew 320 students. That’s more than 300 additional people the school communicated with about the importance of managing debt and making wise college and career decisions, compared with the half dozen who attended the prior event.
Change the culture
At the school struggling with a high cohort default rate, reaching the threshold of facing sanctions was the tipping point. The institution’s president pulled in other offices to assist financial aid. The school added a structured financial literacy and student success program, USA Funds Life Skills®, to its first-year advising. To reach out to borrowers to counsel them about their loans, the school added USA Funds Borrower ConnectTM to its default prevention tools.
The president even joined in by contacting borrowers himself, to serve as an example to others.
By changing the campus culture to make borrower communication and default prevention a top priority for all, in a year the school lowered its cohort default rate to its current draft rate of just over 20 percent — down from more than 30 percent.
Are you looking for ideas for regular borrower contact at your school? Need suggestions for getting your entire campus on board in your default prevention efforts? Take a look at case studies that show how other schools are successfully preventing default. Contact USA Funds to learn more.