From measuring and analyzing data, to using social media to reach borrowers, a variety of common strategies are in place at schools that are successfully preventing student loan default.
Dean Riling, vice president of compliance at Spartan College of Aeronautics and Technology, and Greg Wallis, chief financial officer at Harrison College, recently discussed strategies that their schools are using to lower their cohort default rates.
George Covino, USA Funds® vice president of consulting, joined Riling and Wallis in providing default prevention tips.
The group discussed “The New Toolkit for Student Loan Default Prevention” during the 2014 Annual Convention and Expo of the Association of Private Sector Colleges and Universities.
Covino listed eight steps that many schools have taken to lower their cohort default rates.
1. Combine default prevention efforts with a focus on student success. Schools that have seen reductions in their default rates do not focus on default prevention alone. At these schools, Covino said, default prevention “is either part of a larger student success effort or part of a retention effort, and all working together to keep students on track, through programs, and set them up so they can handle their debt after they graduate.”
2. Establish ways to measure the success of your work. “The key is analytics and reporting,” Wallis told those at the session. At Harrison College, he said, “we monitor, monitor, monitor how effective we are.”
Covino said schools should consider data regarding what is working — and what isn’t working — to inform their plans for future default prevention initiatives.
3. Get institution-wide commitment. USA Funds’ staff often have encountered institutions that, at first, thought of lowering the cohort default rate as a priority for the financial aid office only. But, Covino said, the best default prevention programs are campus-wide efforts.
Wallis said he and others include school officials in the loop on Harrison College’s default prevention efforts, results and trends. “We’ve made it very visible to senior management,” he said.
4. Take a life-of-the-loan approach. Riling reported that Spartan College’s default prevention work ranges from messages in weekly school bulletins and kiosks on campus, to in-person exit counseling, to outreach by phone and email once borrowers leave.
Covino suggested contacting borrowers with assistance early — during their grace period — using targeted approaches with tools like social media. The messages in social media, he said, should be “actionable. Give them something quick that they can respond to very easily.”
5. Be proactive in lowering your default rate. Riling and Wallis said their schools examine reports for current and upcoming cohorts of borrowers to predict default rates. “We have a dashboard in USA Funds Borrower Connect™ that tells you where you stand,” Riling said. “We can look at it and, instantaneously, every month say, ‘OK, we need to work on this cohort.’”
Taking a proactive approach also includes reaching borrowers before they encounter repayment problems, Covino said.
6. Enlist the help of students. Many schools that USA Funds has assisted have found that peer counseling, financial literacy education presented by students, and programs led by student organizations and student leadership often yield positive results, Covino said. When planning default prevention activities, he said, “you might want to think about, ‘How is it that I can involve current students in doing this?’”
7. Assign dedicated staff to the effort. While an institution-wide commitment to default prevention is critical, schools do need specific staff focused primarily on carrying out default prevention activities, Covino said.
At Harrison College, one staff member leads borrower outreach. “Calling from the school,” Wallis said, “we hope the phone gets answered.”
8. Be consistent in your work. Covino warned against letting “the emergency of the week” draw attention away from default prevention work.
“We’re constantly working” to lower Spartan College’s default rate, Riling said, “and we’re getting more and more students calling us back. That’s critical to any success.”