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Effectively Managing Your Cohort Default RateTools to help your students survive growing student loan debt
Hosted by:
Marcia Coleman
Debt Management Consultant, USA Funds
866-497-8723 x18325
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• What will I get out of this session?
• Who is in a “cohort”, anyway?
• When do we “do” default prevention?
• Tools for you and your borrowers
• How do we know that it’s working?
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Overview
• Who, in your opinion, is most likely to default on their loans?
• Who is (or who should be) responsible for default prevention at your
institution?
• What are you currently doing to help your borrowers?
Some Questions for You…
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• ‘Cohort Default Rate’
• Snapshot sample of a year’s worth of your borrowers, and the
percentage of them that default during the first part of their
repayment.
• How long do borrowers have to repay their loans?
What Is A CDR?
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A Closer Look at 2006 CDR
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2006 CDR = those who entered repayment in FY2006 and defaulted in either FY2006 or FY2007
Enter repayment
10/01/05 9/30/06 10/01/05 09/30/07
DEFAULT
Why does it take so long to get the rates?
Let’s Look At An Example:
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2006 CDR = those who entered repayment in FY2006 and defaulted in either FY2006 or FY2007
Enter repayment
10/01/05 9/30/06 10/01/05 09/30/07
DEFAULT
If I graduated from your school on 12/15/05 , I entered repayment on:
6/16/06If I NEVER make any payments, I default 270 days later….
Which delinquent borrowers can potentially effect the school’s annual CDR?
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2006 CDR = those who entered repayment in FY2006 and defaulted in either FY2006 or FY2007
Enter repayment
10/01/05 9/30/06 10/01/05 09/30/07
DEFAULT
Stacey Smith started repayment on 10/5/05 and never made any payments Pat Jones started repayment on 12/1/05,
made payments regularly until 5/1/06, but then stopped paying after 5/1/06….
When Do We “Do” Default Prevention?
When Should You “Do” What You Do?
• Holistic Approach• Initial counseling.• In-School counseling.• Grace period.• Repayment.
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Tools For You and Your BorrowersTools to help you at every stage of the loan cycle
USA Funds Best Practices Manual
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http://www.usafunds.org/financial_aid/debt_management/best_practices/index.html
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• Initial counseling tools
• Conducting an initial loan-counseling session.
• Entrance-interview components.
• Supplemental data sheet.
• Rights and responsibilities summary checklist.
• Federal Stafford loan test.
• How much can you afford to pay?
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• Tools for the in-school period
• Ongoing counseling for continuing students.
• Counseling for students who withdraw from school.
• Counseling for graduating students.
• Academic-year completion letter.
• Lender notification of borrower-status change.
• Exit-interview procedures.
• Exit-interview components.
• Student-loan exit interview form.
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• Grace-period tools
• Grace-period follow-up steps.
• Grace-period letters.
• Graduate letter.
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• Tools for the Repayment Period• Standard repayment. • Loan-repayment options. • Deferments. • Forbearance. • Cancellation. • Delinquency. • Default. • Forbearance letter. • Deferment letter. • Delinquency letters.
More Tools…
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• Entrance/Exit Counseling
• Financial Literacy
• Communication Tools for Borrowers
USA Funds Loan Counselor SM
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USA Funds Loan Counselor SM
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USA Funds Loan CounselorSM is a suite of custom counseling products designed by USA Funds® to help schools fulfill all federal requirements for loan counseling and simplify Stafford-loan entrance and exit counseling with one online program. USA Funds Loan Counselor has two student-facing components:
•USA Funds Stafford Loan GuideSM entrance counseling. •USA Funds Student Loan Transition GuideSM exit counseling.
Financial Literacy is An Important Tool
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• Information about financial literacy and student success is everywhere!
• Research shows students want financial literacy information.
• Plan for your students.
• Repetition is KEY!
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USA Funds Life Skills®
• Help ensure your students graduate on time.
• Help your students borrow wisely.
• Manage finances.
• Repay their student loans.
• Curriculum for undergraduate, graduate/professional
and adult learners.
Why USA Funds Life Skills®?
USA Funds Debt Manager®
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USA Funds Debt Manager®
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• Connect with student-loan borrowers during school and after graduation with
this powerful, Web-based tool that helps you prevent student-loan defaults.
• Generate e-mail lists, letters and call queues automatically to quickly
communicate with borrowers.
• Take control of your school’s cohort-default rate with contact strategies to
assist delinquent borrowers.
• Track borrower and loan information with data that is refreshed weekly.
• Create customized reports to help measure the success of your default-
prevention efforts.
• Communicate with your in-school borrowers easily and effectively.
Next Steps…
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• Know your rate:•http://bcol01.ed.gov/CFAPPS/COHORT/search_cohort.cfm
• Educate others on your campus about the importance of default prevention and debt management.
• Ask your lender/guarantor partners for information on how they can help you.
• Department of Education’s latest information on sample default prevention plans:
•http://www.ifap.ed.gov/dpcletters/GEN0514.html
Next Steps…
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• Lower CDR rates
• Survey data on debt and debt burden will change
• Student satisfaction will go up
• Higher retention
• Happier graduates
• Alumni giving
How Do You Know Your Efforts Are Working?
Any Questions?
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USA Funds® is the nation’s leading education-loan guarantor.
A nonprofit corporation, USA Funds works to enhance postsecondary-
education preparedness, access and success by providing and
supporting financial and other valued services.