By George Covino, Vice President, Consulting
Financial aid administrators are well aware of the importance of keeping their schools’ cohort default rates low. But everyone on campus — and all taxpayers — benefit when fewer students default on their federal student loans.
When you’re making the case for everyone on campus to make student loan default prevention a priority, here are five key points to share:
- Retention and default prevention go hand in hand. Nationwide, more than 70 percent of federal student loan borrowers who default on their loans left school before completing their programs. With retention playing such a strong role in students’ ability to repay their loans, it’s vital that offices such as admissions, student affairs and academic affairs join the effort to help students succeed in school, receive their certificates or degrees, and get a job.
- Taking on student loan debt is a big responsibility. When students have student loans, they also have the many responsibilities that go along with taking on that debt. Educating students about financial literacy, student success and repayment options — as well as their options for repayment relief — requires messages that come not only from the financial aid office but throughout the campus.
- Successful students are good ambassadors. Students who graduate, find employment, and successfully repay their loans are likely to have positive things to say about your institution and even give back financially — but those who don’t may not. Remind your alumni relations and development staff of those repercussions, and encourage them to assist in your student success and default prevention efforts.
- Title IV financial aid participation is important to your institution. If your cohort default rates are high enough, your school risks being ineligible to provide federal Title IV funds to help your students pay for their education. That lack of funding could have dire consequences for an institution — another reason why preventing default is a call to action for an entire campus.
- It’s about the students. In my years working in financial aid and in partnering with schools to assist with default prevention through USA Funds®, I’ve learned that school faculty and staff have a common priority: the students. When you consider the negative impact that default has on a student — consequences ranging from added fees, to wage garnishment, to damaged credit — helping students successfully repay their loans is in the best interest of everyone involved with your institution.
Need help with your default prevention efforts? Contact USA Funds to learn about our default prevention tools and solutions, including those focused on borrower communication and financial literacy and student success training.