MCC Default Management

Marianne Gren DevennyDean of Enrollment Services

Leana Davis Director of Financial Aid

What we will present

What is a default rate? What is meant by cohort default rate?

The history of MCC’s default rate and default management

How the Department of Education has changed the default rate calculation

MCC’s default management plan

What is a default rate?

Percentage of school’s borrowers who enter repayment during a fiscal year and those borrowers that default (over three fiscal years)

Number of students in default_________ Number of students who are in repayment

If a student is in repayment, the student can have their student loan deferred for multiple reasons, including at least half time attendance at a post secondary institution, medical, and financial issues.

Default Rate Calculation

Example: In 2005, there were 200 individuals who were in

repayment, 33 had defaulted.

_33_ 200

= 16.5%

When can sanctions be imposed?

If a school’s three most recent official 3 year default rates are 30% or greater

Except in the even of a successful adjustment or appeal, a school will lose Direct Loan and Federal Pell Grant program eligibility for the remainder of the FY of the sanction notification and the following 2 FY’s

Higher Education Opportunity Act requires schools with a 3 year default rate of 30% to establish a prevention task force

History of MCC’s Default Rate

cohort default rate, 1994 - 2011

0

5

10

15

20

25

History of MCC's Default Rate, 1994-2010

2001 2004 2009

%

1994

2000

The Inception of the Default Management Plan In 2003, the 2001 rate had increased from 10.6% to

22.3% Illinois Student Assistance Commission provided MCC

with a list of students who were late on repayment Financial Aid contacted students to give them

options and explain the consequences of going into default

Researched students who were in default

Students in default, 2003 research

Majority of these students did not meet Financial Aid Satisfactory Academic Progress (SAP) policyRequired by the Department of Education. MCC’s 2003 policy

required students to: • Complete 67% of their classes satisfactorily • Earn a minimum semester GPA of 1.5

Financial Aid notified current students who did not meet the SAP policy

These students were reminded of their loan obligations

The steps above defined MCC’s Default Management Plan from 2003-2012

Important points to remember

A student’s default rate is determined after a person is no longer a student

Reasons for defaulting:Moving and not giving a lender a forwarding addressEmploymentMedical issuesEducation completedBackground

Year Default Rate

1994 7

1995 11.5

1996 1.7

1997 11.8

1998 14

1999 11.7

2000 10.3

2001 22.3

2002 15.2

MCC’s Default Rate Percentages, 1994 -2002

Year Default Rate

2003 14

2004 21.3

2005 16.5

2006 13

2007 14.6

2008 14.1

2009 21.9

2010 15.3

2011 (draft) 15.8

MCC’s Default Rate Percentages, 2003 -2011

COLLEGE 09 Rate COLLEGE 09 Rate1 ILLINOIS EASTERN COMMUNITY COLLEGES -FRONTIER 9.6 22 COLLEGE OF DU PAGE 202 CARL SANDBURG COLLEGE 12.3 23 LAKE LAND COLLEGE 203 TRITON COLLEGE 12.7 24 CITY COLLEGES OF CHICAGO - KENNEDY KING COLLEGE 20.14 KANKAKEE COMMUNITY COLLEGE 13.1 25 PRAIRIE STATE COLLEGE 20.55 ILLINOIS VALLEY COMMUNITY COLLEGE 13.2 26 HAROLD WASHINGTON COLLEGE 20.86 LEWIS AND CLARK COMMUNITY COLLEGE 14.3 27 KISHWAUKEE COLLEGE 21.37 ELGIN COMMUNITY COLLEGE 14.6 28 BLACK HAWK COLLEGE 21.98 MORAINE VALLEY COMMUNITY COLLEGE 14.7 29 MCHENRY COUNTY COLLEGE 21.99 RICHARD J DALEY COLLEGE-CITY COLLEGES OF CHICAGO 16 30 ILLINOIS EASTERN COMMUNITY COLLEGES - LINCOLN TRAIL 23.8

10 COLLEGE OF LAKE COUNTY 16 31 ILLINOIS EASTERN COMMUNITY COLLEGES - OLNEY CENTRAL 24.411 OAKTON COMMUNITY COLLEGE 16 32 SOUTHWESTERN ILLINOIS COLLEGE 24.612 JOLIET JUNIOR COLLEGE 16.4 33 ILLINOIS CENTRAL COLLEGE 24.713 HEARTLAND COMMUNITY COLLEGE 16.6 34 HIGHLAND COMMUNITY COLLEGE 24.814 DANVILLE AREA COMMUNITY COLLEGE 17.1 35 SOUTHEASTERN ILLINOIS COLLEGE 2515 ROCK VALLEY COLLEGE 17.7 36 REND LAKE COLLEGE 25.916 WAUBONSEE COMMUNITY COLLEGE 17.8 37 JOHN A. LOGAN COLLEGE 25.917 PARKLAND COLLEGE 18.1 38 RICHLAND COMMUNITY COLLEGE 25.918 HARPER COLLEGE 18.6 39 ILLINOIS EASTERN COMMUNITY COLLEGES - WABASH VALLEY 26.619 JOHN WOOD COMMUNITY COLLEGE 18.7 40 CITY COLLEGES OF CHICAGO - MALCOLM X COLLEGE 29.120 LINCOLN LAND COMMUNITY COLLEGE 19 41 SPOON RIVER COLLEGE 29.621 SAUK VALLEY COMMUNITY COLLEGE 19.2 42 MORTON COLLEGE 43.2

2009 Cohort Default Rate Rankings

COLLEGE 10 RATE COLLEGE 10 RATE 1 RICHARD J DALEY COLLEGE-CITY COLLEGES OF CHICAGO 7.5 23 ELGIN COMMUNITY COLLEGE 19.32 CITY COLLEGES OF CHICAGO - MALCOLM X COLLEGE 8.3 24 ROCK VALLEY COLLEGE 19.53 KANKAKEE COMMUNITY COLLEGE 11.3 25 KISHWAUKEE COLLEGE 19.54 CARL SANDBURG COLLEGE 13.2 26 JOHN A. LOGAN COLLEGE 20.55 ILLINOIS VALLEY COMMUNITY COLLEGE 13.5 27 LAKE LAND COLLEGE 20.66 MORAINE VALLEY COMMUNITY COLLEGE 14.1 28 SAUK VALLEY COMMUNITY COLLEGE 21.87 ILLINOIS EASTERN COMMUNITY COLLEGES - OLNEY CENTRAL 14.2 29 BLACK HAWK COLLEGE 22.18 COLLEGE OF LAKE COUNTY 14.4 30 DANVILLE AREA COMMUNITY COLLEGE 22.19 CITY COLLEGES OF CHICAGO - KENNEDY KING COLLEGE 14.5 31 ILLINOIS EASTERN COMMUNITY COLLEGES -FRONTIER COMM 22.8

10 MCHENRY COUNTY COLLEGE 15.3 32 PARKLAND COLLEGE 23.111 TRITON COLLEGE 16 33 RICHLAND COMMUNITY COLLEGE 23.812 OAKTON COMMUNITY COLLEGE 16 34 SOUTHWESTERN ILLINOIS COLLEGE 24.813 LEWIS AND CLARK COMMUNITY COLLEGE 16.1 35 ILLINOIS CENTRAL COLLEGE 2514 ILLINOIS EASTERN COMMUNITY COLLEGES - WABASH VALLEY 16.6 36 LINCOLN LAND COMMUNITY COLLEGE 25.115 ILLINOIS EASTERN COMMUNITY COLLEGES - LINCOLN TRAIL 17 37 HEARTLAND COMMUNITY COLLEGE 26.116 JOHN WOOD COMMUNITY COLLEGE 17.2 38 SPOON RIVER COLLEGE 26.417 WAUBONSEE COMMUNITY COLLEGE 17.8 39 HIGHLAND COMMUNITY COLLEGE 26.618 JOLIET JUNIOR COLLEGE 18.2 40 MORTON COLLEGE 28.419 COLLEGE OF DU PAGE 18.3 41 REND LAKE COLLEGE 2920 PRAIRIE STATE COLLEGE 18.4 42 KASKASKIA COLLEGE 36.721 HAROLD WASHINGTON COLLEGE 18.4 43 WILBUR WRIGHT COLLEGE 10022 HARPER COLLEGE 18.4

2010 Cohort Default Rate Rankings

How the Department of Education has changed the Default Rate calculation In 2011, the calculation changed from a two year to a

three year calculation An increased number of students is used in the calculation More students will not be eligible for deferments in the

calculation The change raised the default rate for most schools Currently the Department of Education does not impose

sanctions against a school until there is a higher default rate

2013-2014 Default Management Plan Pre – Loan Disbursement

Students not eligible for grants packaged with a loan award

Students packaged with grants required to see the Loan Specialist before being awarded a loan• MCC Suggested amounts

Student completes Entrance Counseling

2013-2014 Default Management Plan Cont. Post – Loan Disbursement

Exit Counseling

Review Delinquency Report from National Student Loan Data System (NSLDS)• Letters Sent during early and late stage of delinquency • Students contacted via phone to provide counseling

and servicer information • Students in Default receive information on recovering

via mail

Proposed Reforms

Protect Student Borrowers Act of 2013 Schools with at least a quarter of students take out loans Loan Default Rate reaches 15% in a single year would pay a

penalty of 5% of the value of the outstanding defaulted debt

As the default rate increases the penalty would increase up to 20%

COMMUNITY COLLEGES ARE EXEMPT

2014-2015 Default Management Plan Pre – Loan Disbursement

Students not eligible for grants will receive a letter explaining their payment options • Payment Plan • Scholarships • Loans

Student packaged with grants will receive loan information in their award letter

2014-2015 Default Management Plan Financial Literacy Counseling

Entrance Counseling

Budget Worksheet • Income vs. Expenses • Visit the Financial Aid Office

– Discuss Loan Amounts – Discuss Repayment Options

No changes to the Post - Loan Disbursement Plan