By Susan Shogren, Regional Training Executive
The national student loan cohort default rate continues to climb, and many schools are seeing their own rates rise. Are you looking to reverse that trend for your school for years to come?
Early after your borrowers leave school, that is.
In a webcast last week, I shared with 170 participants six best practices for early outreach to borrowers. To really make a difference, you need to reach your borrowers to counsel them about repayment sooner. They need your help — and they need it early on.
If you were to reach your borrowers who are in their grace period or early in their repayment period to counsel them now, it could reap benefits for the cohort default rate released in calendar year 2015 and beyond.
Here are six steps to follow to maximize your early outreach to borrowers:
- Maintain quality demographic data. You can’t counsel borrowers if you can’t reach them. So work to make sure the contact information you have on record is complete, accurate and current. Remind students regularly throughout their academic careers to keep their contact information up to date — so you can reach them to provide help when they need it.
- Identify your at-risk students. Targeting your students who are most likely to default is an effective way to prevent default. But don’t assume you know which of your students are at risk of defaulting. Use data from every source and perspective possible to determine who is likely to need the most repayment help when they leave school.
- Conduct outreach during borrowers’ grace period. Remember those groups you identified as being most at risk of defaulting? Focus on those borrowers when they enter their grace period. Other groups to target during this stage in the loan cycle are those who have withdrawn from school and those who have dropped to less than half-time attendance.
- Contact borrowers during the early stages of their delinquency. Reaching out to borrowers who have missed just one or two payments allows you to serve as borrowers’ trusted adviser while there’s more time to get on track. Refer to the National Student Loan Data System or — better yet — data directly from loan servicers to show you which borrowers to contact.
- Reach out to borrowers before their forbearance or deferment expires. Deferment and forbearance can be good options for borrowers, but they don’t go on forever. Contact your borrowers whose deferment or forbearance will expire in the next month to remind them they’re re-entering repayment and to assist with any alternative arrangements necessary.
- Don’t forget borrowers in late-stage delinquency. Sure, the goal is to prevent borrowers from getting to this stage. Not only are these borrowers closer to incurring the serious consequences of default, but they often are the most difficult to reach and assist. Your role as trusted adviser may help you get through to borrowers to provide assistance when others can’t.
If you’d like more details about early outreach to borrowers, view a recording of last week’s webcast. And in another recent webcast, I provided eight best practices for default prevention; that Sept. 10 webcast recording also is available for viewing.
School representatives will share their perspective on effective default prevention in a Nov. 5 USA Funds® webcast. Learn more about that event.
USA Funds also offers tools and solutions — including a borrower communication tool, USA Funds Borrower ConnectTM — to help your school lower its cohort default rate. Contact USA Funds to learn more.