USA Funds Helps California College Meet Default-Rate Goal
Last fall Four-D College, Colton, Calif., aimed to reduce its cohort-default rate to 10 percent or less from its 2002 rate of 14.2 percent. Through intensive debt-management and default-prevention efforts, Four-D College surpassed that goal, recording a draft default rate of 3.1 percent for the 2003 cohort.
According to Rocio Garcia, director of financial aid at Four-D College, a key reason that the school began working with USA Funds® is the Default Management System. Garcia and her staff reach delinquent and defaulted borrowers through DMS, a tool that USA Funds provides to help schools track borrower and loan information, permitting the schools to carry out customized letter and telephone campaigns.
DMS is PC-based software designed to enhance schools' efforts to reduce cohort-default rates. USA Funds has developed a new Web-based default-prevention tool — USA Funds Debt ManagerSM — to assist schools in contacting their student-loan borrowers.
“DMS has helped us a great deal,” says Garcia. “I also think our success has a lot to do with the support from everyone on campus, from the president to the faculty to the staff. We had their ‘buy-in' on what we wanted to do, and they have supported us. They also have helped others understand the importance of a low cohort-default rate. It's wonderful how everyone has a played role in our success.”
Emphasizing student financial literacy
Garcia's school also uses USA Funds Life Skills®, a financial-literacy program, to reach student-borrowers. She combines modules 1 and 2, “Get a Grip on Your Finances: Smart Spending for Students,” and “Seek out Financial Aid: Funding Resources and Financial Obligations,” in interviewing and counseling sessions when students enter the school.
Due to its location and the population that it serves, the proprietary school has a large group of at-risk students, particularly single mothers who are transitioning into the work force. Four-D College 's programs are eight-to-12-months long. One-third of the way through their program, students must attend a session featuring Module 3, “Work Hard but Smart: How to Be Successful in School and Graduate on Time.”
Four-D College also uses USA Funds Life Skills Module 5, “Now That You Are About to Graduate: Taking Control of Your Life,” in exit counseling and in conjunction with placement services.
“Students like USA Funds Life Skills,” says Garcia. “According to their evaluations, they think the information is valuable.”
Eboni Larde, default-prevention specialist, uses information from USA Funds Life Skills to conduct seminars for students who are experiencing difficulties getting through school. She also makes calls to student borrowers. Garcia explained that Larde has a special rapport with students, and that she makes sure students understand the financial-aid staff is there for the students.
Program directors receive a monthly default-management report listing borrowers close to delinquency, and the directors contact the borrowers about making payments. Garcia explained that many directors have positive relationships with the borrowers, even after they leave school.
“USA Funds Life Skills has not only helped our cohort-default rate but our retention rate as well,” says Garcia. “Fewer students are dropping out, and those who do drop out are giving different reasons than we've seen in the past. There seem to be fewer who cite money concerns.”
To learn how your school can take advantage of USA Funds' products and services to decrease its default rate, visit the “Debt-Management Information” section of USA Funds' Web site.