effectively managing your cohort default rate tools to help your students survive growing student...

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

mcoleman@usafunds.org

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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.