This guide describes measures that schools should find helpful in reducing defaults rates under the Federal Family Education Loan Program. A school that is required to use a default-management plan to participate in the federal Title IV student-aid programs should review U.S. Department of Education guidance regarding development of a default-management plan.

Other schools should strongly consider implementing some or all of the items listed below and may find additional ideas on default prevention by visiting USA Funds’ Best Practices Manual or by referencing the U.S. Department of Education’s publication, Ensuring Student Loan Repayment.

A school that successfully implements a default-management plan does the following:

1. Uses its resources efficiently.
2. Provides enhanced initial and exit counseling.
3. Works to reduce the number of dropouts.
4. Works to ensure that its borrowers can repay their student loans.
5. Keeps in touch with its borrowers.

In addition to the goals listed above, a comprehensive default-management plan should encompass some or all of the following items:

1. Analysis of your student population.
2. Hiring and training of campus staff.
3. Evaluation of the current default-management plan.
4. Aid-packaging philosophy.
5. Education of borrowers.
6. Networking and development of external relationships.
7. Effective utilization of reports.
8. Development of a resource library.

Default prevention and debt management must be a campus-wide concern. The program should have the support of the president or chancellor and should include participation by relevant senior executive officials, faculty, staff and students. We have provided a sample default-management plan for ABC College to assist you in the development of a comprehensive and effective plan of your own.