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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?