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.