Shaw University Shares Lessons Learned in Debt Management Success

Last year Shaw University’s official cohort default rate reached a level that required  the school to develop a default prevention plan. Financial aid staff members committed to double down on all fronts of student loan debt management.

Those efforts are paying off. Now Shaw University has a draft three-year cohort default rate that reflects a decrease of more than one-third. USA Funds®’ tools and solutions are helping the school as it works toward its goal of single-digit cohort default rates.

Financial aid staff members of the Raleigh, N.C., school — the South’s oldest historically black college — say they have learned a number of lessons as they established and began implementing their default prevention plan.

Start with the back end.

“You’ve got to understand where to put your efforts into slowing the ball down first,” says Valentino Bryant, Shaw University’s default manager.

At Shaw, that has meant using USA Funds Borrower ConnectTM  to help identify and communicate with borrowers who already are delinquent and in default.

USA Funds Borrower Connect is a Web-based tool that automates borrower communication through telephone, letter and email campaigns, using loan information that schools upload from their various loan servicers.

Shaw’s financial aid team reaches out to borrowers by phone, letter and email on a regular basis — including a once-a-week “Monday Blitz” in which six staff members spend extra hours calling borrowers to discuss repayment.

“Once we can talk to them and find out why they’re in a delinquent status, we can tell them about the cons of default,” Bryant says. “We serve as a liaison and actually connect them to their loan servicers, staying on the phone as they talk with their servicers to help if they feel intimidated.”

Identify borrowers most at risk

“Instead of haphazardly trying to attack defaults, we got an idea of who our defaulters were so we could begin to put early alert systems in place,” says Wanda Carter, Shaw University financial aid counselor. “We learned that many of our defaulters were ‘unofficially withdrawn,’ meaning they just left and didn’t return to school.”

Financial aid personnel worked with the campus-wide default prevention committee and the school’s institutional research staff to examine borrower data.

Identifying withdrawn borrowers as those most at risk of defaulting helped Shaw’s financial aid staff establish a tactic of providing financial literacy workshops early on in students’ careers and providing student-mentors to promote retention.

Expand your efforts as appropriate

After establishing a successful process for assisting borrowers who had left school, Shaw University broadened its default prevention efforts to include students who still are on campus, but only after it had established a successful process for addressing borrowers who have left school.

Carter says enhanced exit counseling now includes more financial literacy information, and provides borrowers with specific information about their loan amounts and servicer information.

“A lot of our early default prevention success is based on our efforts with delinquent and defaulted borrowers,” Bryant says. “Now we’re starting to see a lot of results from our upfront efforts.”

Ask borrowers to help

Bryant says former students who have struggled with repayment often are the best sources to address with current students the importance of sound debt management.

“We have a student we helped get into rehabilitation to resolve her default,” Bryant says, “and she was willing to tell her story at financial literacy workshops. Sometimes it’s better for students to hear the message from their peers.”

Immerse yourself

“Live it, sleep it, love it,” Bryant says. “We have a great group of people across campus who are willing to roll up their sleeves and get into this fight. We’re in this together.”

He recommends staying abreast of default prevention issues to learn about new approaches to addressing debt management.

Set attainable goals

At Shaw, setting attainable goals has meant starting with an objective to speak with certain numbers of delinquent borrowers a day. From there, Shaw has raised the bar to its current goal of achieving a single-digit cohort default rate.

And, Carter says, Shaw has learned that it pays to be consistent. “Don’t get discouraged,” she says. “This is a long-term effort, and you have to keep working until you find out what works best.”

If you have questions about default prevention or establishing a debt management plan at your school, contact USA Funds.