Default Prevention On Campus

1. Default Prevention On Campus

2. 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

3. 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

4. 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

5. 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

6. 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

7. Academic Counseling • Advising • Tutoring • Study & time-management counseling • Supplemental course instruction

8. Personal Counseling • Goal setting • Stress reduction • Problem solving • Community resource information

9. 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

10. 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

11. The Players Let the borrower know who is involved: • Financial aid office • Lender • Servicer/secondary market • Student Loan Counseling Services • Guarantor

12. 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

13. 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”

14. 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”

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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)

22. Questions?