Default Prevention On Campus

Default Management Plan

Develop your plan via a default management team– Representative from each office involved in delivery

of aid– Senior administration & middle management– Faculty & student representative

Establish goals & objectives Identify & allocate resources for plan Define default management evaluation

methods Establish data collection

Impact of Student Retention

A study compiled by Texas A&M found:Out of 13,000 students- 2% (260) of students that graduated, defaulted- 14% (1,820) of students that did not graduate, defaulted

Found that background variables are not very important:– Preparedness– Demographic– Financial situation

Student Retention

Concluded that student’s retention rates are a good indicator of their likelihood to default on loans meaning success in college is the most important indicator of default risk

Students make the decision to leave school within three to four weeks– Subconscious or conscious decision– Need institutional “velcro” to touch and hold the

students immediately (create affiliation) Compare what your institution spends to recruit

students with the amount spent to retain them

Student Retention

Most Common Complaints from Students:– Availability of financial aid– Course registration– Campus run-around– Concern for students as individuals– Helpfulness of financial aid counselors

Top Strengths of Institutions– Knowledgeable faculty– Clear and reasonable program requirements– Approachable academic advisors– Well-maintained campus– Students experience intellectual growth– Safe and secure campus– Enjoyable student experience– Availability of faculty– Quality of instruction– Students feel welcome

Noel Levitz, The 2005 National Satisfaction and Priorities Report

Student Retention

Assess the drivers influencing retention rates:- Available Financial Aid- Support Services- Early-Alert System of withdrawals- Classes and class schedules that set students up for failure

Low-income student persistence is directly & positively related to:– financial aid counseling,– career counseling,– academic counseling, &– personal counseling

Academic Counseling

Advising

Tutoring

Study & time-management counseling

Supplemental course instruction

Personal Counseling

Goal setting

Stress reduction

Problem solving

Community resource information

Student Misconceptions

Know how much they need to borrow Will borrow only what they need Have a good idea of what they will earn after

graduating Know how much they borrowed Will keep track of their loans after they leave

school

Borrower’s Perspective

Too much information during the admissions process– Can’t fully absorb entrance counseling– Need to repeat counseling several

times

Financial aid counselors “lecturing” does not have much impact– Recent graduate– Defaulted alumnus (credit ruined, wages garnished)– Default Prevention Staff from Guarantor– Lender

The Players

Let the borrower know who is involved:

Financial aid office Lender Servicer/secondary market Student Loan Counseling Services Guarantor

Registration

Collect references each fall & spring– Registration isn’t complete until student

gives references– References may be different each semester

Financial aid staff should be available to answer financial aid questions

Orientation/Freshman Seminar

Include money management– Credit card use– Checking account management– Upromise benefits (www.upromise.com)

Distribute brief “fact sheet” about the financial aid office– Allied Medical College “Lifetime Financial Aid

Counseling”– “Known point of contact”

Parents

Present materials during orientation, parent’s weekend & sporting events

General information regarding general types of student debt, typical payments required for student loans & the consequences of default

Remember the Privacy Act with relations to specific student borrowing information!– Webster University: “Release of Information Authorization”

Career Placement

Other than relevant work experience, participation in internships or cooperative education programs is the best way for college graduates to increase their employability– Facilitate internships

Offer career placement services to current and former students– Ranken Technical College offers Lifetime Job

Placement Unemployment is a main reason reported to

cause loan repayment delinquency

Career Placement

College students want more help from campus personnel in choosing careers and finding jobs after graduation– Job placement– Resume writing– Interview skills– Employment tips– Networking– JobGusher (www.jobgusher.com) Noel Levitz, National Student Satisfactory Report,

2003

Campus Media Outreach

Announcement or letter in student newspaper regarding availability of financial aid staff

Article regarding debt management in student newspaper

Besides unemployment, another main reason to cause delinquency - not aware of options– Income sensitive repayment– Graduated repayment– Deferment– Forbearance– Consolidation

Graduation

Graduation announcements– Provide several free announcements for references

listed– Send announcements on behalf of students

Distribute direct-debit authorization forms from the borrower’s loan holder with graduation information– Demonstrate savings by using direct debit if the

lender offers interest rate reduction

Alumni Approach

Keep up-to-date demographic information for former students

Mail a half-page flyer regarding availability of options if having problems repaying loans

Offer a financial management seminar to alumni & spouses– Risk management– Insurance– Saving & investing (short & long term)– Tax effects

Other Smart Habits

Allow students to keep school e-mail for up to two years in order to maintain contact

Monitor attendance to prevent unofficial withdraws & counsel students

Train school personnel to ask for current address & phone number if a former student calls or visits

Don’t package student loans on initial award letter– If interested in loans, check here– Must request loans in person

Other Smart Habits

Get permission to discuss student loans with parents/spouse (collect signature on award letter)

Go where students are– Set up table during career fairs & placement events– Collect references while students are waiting in line– Offer money management counseling during lunch in

the student union– Set up booths in high traffic areas (including outside)

Questions?