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Developing a Financial Literacy and
Default Prevention Program
Presented by:
Will Lindsey
FedLoan Servicing
Why create a program?
• Preparing your students for financial success during college will help them to be successful after college.
• Prepared students will be more likely to:– Successfully repay their student loans.– Advocate for the value of higher education.– Become active alumni.
Where do I begin?
• Establish a team of resources on your campus.• Create common themes through simple, meaningful
messages.• Use relatable examples and help students create
their own.• Implement a diversified approach.• Track your success with measurable objectives.
Getting Started
In School Repayment Delinquent
Approach program building from the student’s perspective.Approach program building from the student’s perspective.
Financial literacy is the on-campus aspect of your default prevention program. It’s a crucial first step.
In School - Campus Involvement
• Your administration and faculty could be impacted by your school’s high Cohort Default Rate.
Make them part of the solution!!!
• Create a team on your campus which meets regularly to strategize and discuss initiatives.
How do I involve other offices on my campus?
Establish a team including:– Financial Aid Staff– Career Counseling Center– Faculty (Finance, Marketing, etc.)– Resident Life Staff– Greek Life/Social Groups– Athletic Clubs– Political Organizations– Academic Associations– Students
How do I engage my students?
• Consider a diversified approach– Personalized communications on their total
indebtedness– Social media (Facebook, Twitter, etc.)– In-person sessions– School publications– Supplement existing courses/programs, such as
entrance counseling and orientation– Peer mentors/alumni buddies
What should I cover?
• Understanding Financial Aid
• Budgeting– Assess their financial situation– Identify needs vs. wants– Understand their financial behaviors– Create a plan for the future
• Time Management
• Using Credit Wisely
How do I measure success of on-campus initiatives?
• Set specific goals for each event and initiative
• Gauge student participation
• Survey students for feedback
• Monitor behavioral changes– Reduced overborrowing– Reduced loan default
Returning Students – Before You Owe
Encourages students to record their loan balance and servicer information before they take on additional debt.
Worksheet found at MyFedLoan.org/schools on our Publications page.
Entering Grace - Before You Go
Provides students with a convenient location to record the information they learn when reviewing their loan portfolio at Exit Counseling.
Worksheet found at MyFedLoan.org/schools on our Publications page.
Targeting At-Risk Students
• Review prior defaulters at your school to identify common characteristics.– Withdrawn students– Transfer students– Participants in particular programs of study– SAP students– Students who borrowed above the cost of
attendance
Delinquent Borrower Communications
• In-school– Meet with “high-risk” students, based on your research– Encourage small, manageable payments while in school
• Grace– Send reminder to students of approaching payments– Make phone calls to “high-risk” students
• Repayment– Make phone calls to students ending a deferment/forbearance– Send letters/emails to early stage delinquent students– Make phone calls to late stage delinquent students
Delinquent - NSLDS Resources
Use the NSLDS Delinquent Borrower Report to produce letters to delinquent borrowers who have loans serviced by any federal servicer.
More information and instructions found at MyFedLoan.org/schools on our Training page.
Setting a Goal
• Set a target default rate for your institution.– Identify the maximum number of defaults to meet your target.– Project your rates throughout the year by monitoring current
defaulted borrowers and borrowers over 300 days delinquent.– Control your three-year rate by contacting your two-year
defaulters and encouraging rehabilitation.
Measure Success
Categorize your efforts, track your success, and make adjustments.
Late-Stage Delinquency Students - Total Students (100)
Sample Size
EffortResponded
to effortResolved delinquency
through paymentResolved delinquency through
other means
50 Email 15 (30%) 7 (47%) 8 (53%)
50 Phone Call 30 (60%) 10 (33%) 20 (67%)
High-Risk Students - Total Students (90)
Sample Size
Risk FactorMade in-school
paymentEnrolled in automatic
paymentsNon-delinquent
50 Transfer 5 (10%) 15 (30%) 45 (90%)
40 SAP 2 (5%) 15 (38%) 30 (75%)
Establish an action plan and follow the students targeted to determine their success.
Take Action
• What are you doing today for financial literacy and default prevention?
• What would you like to start immediately?• What changes would you like to implement
over the next six months?
Questions?
Want to learn more? Contact your sector representative!