Student Default Rates: SUNY Data Analysis and Trends. SUNY System Administration Office of the Provost

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1 Student Default Rates: SUNY Data Analysis and Trends SUNY System Administration Office of the Provost May 2014 DRAFT VERSION The State University of New York has embarked on an exciting and innovative initiative which addresses some of the greatest concerns in higher education today. This multi faceted approach to debt and default management will result in lower default rates and higher retention and graduation rates. SUNY Smart Track is a comprehensive and transparent system wide plan to promote awareness and understanding regarding college choice, college financing options and responsible loan borrowing. This initiative addresses: the need for transparency in college costs, increasing student indebtedness and rising student default rates. You can t turn on the television or look at a newspaper without seeing a report on the ever increasing debt students are incurring in the pursuit of higher education. SUNY understands that too much student debt and lack of understanding their rights and responsibilities as a student loan borrower, leaves students at risk of delinquency or worse, default. The consequences of delinquency and default are far reaching for individuals who find themselves in this unfortunate position. SUNY faces the additional challenge of higher default rates at campuses where students at a higher risk of default attend, Community Colleges. We also know, from our extensive research, that students who are successful are more likely to repay their loans regardless of the amount they borrowed. All SUNY campuses have initiatives in place to engage and retain students but we know we can do even better. The added bonus to this very important initiative is that helping our students in this manner also makes good business sense. It costs more money to recruit students than it does to retain them. We want to keep students in their seats and help them to graduate. Smart Track begins with a standard SUNY Award Letter, continues with strong financial literacy tools and provides engagement of student loan borrowers throughout their time on one of our campuses. If they leave campus and find themselves struggling to pay their student loan, we will assist them in getting back on track. This is the formula for SUNY students to achieve success. National Perspective and SUNY Stats Graduates from SUNY State Operated campuses borrow an average of $22,363 while graduates from a SUNY Community College borrow an average of $16,211. These averages tell us how much our graduates borrow but it doesn t tell us how successful they are in repaying the amounts they borrowed. According to data provided by the U.S. Department of Education, in 2010, 80,564 SUNY borrowers entered repayment of their student loan while during the same time period, 9,669 SUNY borrowers entered default. These numbers include all student loan borrowers, not just graduates. In fact, it is likely that the majority of students who entered default during that time period were not graduates. Students who are not successful in earning a college degree are more likely to default on their student loan than students who graduate, regardless of the amount they borrow. It is concerning to note that across the country, 4 million borrowers from over 5,900 post secondary institutions entered repayment in 2010 and approx 600,000 of them defaulted. The result was a national default rate of 14.70%.

2 SUNY Default Rates Compared Nationally 2009 CDR 2010 CDR Nation Average Default Rates 13.70% 14.70% 4-Year Public Colleges 7.90% 9.30% 2-Year Public Colleges 18.90% 20.09% SUNY 11.88% 13.16% State Operated Campuses 7.54% 7.97% Research University Centers 4.90% 5.59% Other Research/Doctoral 2.42% 2.24% Comprehensive Colleges 7.38% 7.67% Technology Colleges 13.28% 14.04% Community Colleges 17.91% 19.74% National Notes about Default To be in default on a federal student loan means you have been delinquent and have not made any payments for a full year (these are former students) Borrowers have a 6 month grace period when they leave campus, whether they graduate or not, to prepare for successful repayment Students are four times more likely to default if they withdraw 70% of borrowers who default withdrew without completing their program 91% of defaulters didn t have their full 6 month grace period because of late or inaccurate enrollment reporting There are many ways to avoid default including deferments (unemployment and hardship), forbearance (short term relief) and income contingent repayment plans The SUNY Difference The major components of SUNY Smart Track are what make this initiative unique. SUNY is the first public university to develop such a large scale and comprehensive commitment to provide transparency in costs and financial aid offerings, to assist in reducing student indebtedness and to combat rising default rates. Smart Track begins with a standard SUNY Award Letter, continues with strong financial literacy tools and provides engagement of student loan borrowers throughout their time on one of our campuses. If they leave campus and find themselves struggling to pay their student loans, we will assist them in getting back on track by getting back to campus. This is the formula for SUNY students to achieve success. SUNY s Approach * SUNY Smart Track Award Letter The SUNY Smart Track Award Letter (now in its second year of use) is used by all SUNY colleges and universities to provide prospective and current SUNY students and their families a standardized financial aid award letter with clear, concise and common terms, definitions and financial aid award categories which will better educate students during a most critical time of their college career. * SUNY Smart Track Financial Literacy Website The U.S. Department of Education (DOE) states emphatically that a correlation exists between increased financial literacy and decreased delinquency and defaults in relation to student loan borrowing. DOE recognizes that schools play an important role to reach prospective and current students by offering financial literacy tools. This premise has been further supported by national research studies.

3 * SUNY Smart Track Student Engagement Project SUNY Smart Track Student Engagement Project will engage those students, at the highest risk of default throughout their time on campus and beyond, including the borrower s grace period and applicable periods of loan delinquency. Student engagement communications will support ongoing campus retention efforts and available campus resources by engaging students at critical points during their freshman year, the time frame where at-risk students are most vulnerable to withdrawing. Students are identified using data from the National Student Loan Data System (NSLDS). History and Background During the annual 2011 Student Financial Aid Conference, SUNY Administration s Office of Student Financial Aid entered into preliminary discussions with John Pierson from the U.S. Department of Education Federal Student Aid (FSA) Delinquency and Default Prevention-Direct Loan Servicing Division to discuss the expected rise in student loan default rates. According to federal data projections, the change to a three-year cohort default rate calculation, from a two-year calculation window, was going to result in the nationwide increase of student loan default rates, for all college sectors. In an attempt to build off the conversations with SFA, a statewide SUNY Default Prevention Task Force was developed to develop a system wide collaborative approach to default prevention. Initial Task Force meetings were held at SUNY Administration with representatives from the Department of Education and campus statewide campuses. Invitations were initially extended to SUNY Community College colleagues and included representatives from the following offices: Financial Aid; Admissions-Enrollment Management; Academic Affairs, and Business Office-Registrar SUNY Administration established a project team to collaborate on the effort that included representatives from: The Office of Student Financial Aid Services; The Office of Community Colleges; and The Office of the Provost including Academic Affairs and Enrollment Management Institutional Research Institutional Technology According to the FSA, an effective default prevention program should focus on the root causes of default and will include 3 primary components: Risk assessment and analysis; Targeted in-school interventions to improve student success; and Measurable delinquency resolution strategies Although the identification of campus specific default predictors is the preferable approach, FSA also recognized the importance of using industry recognized default predictors in the development of an effective default prevention-student engagement plan. Ongoing discussions with the Department of Education also highlighted the importance and need to partner with key campus and external stakeholders in order to optimize and develop effective default prevention efforts-leading to the commonly acknowledged FSA motto, It s Not Just a Financial Aid Problem. SUNY Smart Track was formally established in September 2012 with the passage of a Board of Trustees resolution adopting the initiative at all SUNY campuses.

4 Appendix SUNY Smart Track Part A Program detail Part B - SUNY Smart Track Screen Shots Part C Three-Year Cohort Default Rate (CDR) and Students in Repayment Charts by SUNY Sector: Research University Centers Other Research/Doctoral Comprehensive Colleges Technology Colleges Community Colleges

5 Part A-Program Detail SUNY s Approach * SUNY Smart Track Award Letter The SUNY Smart Track Award Letter (now in its second year of use) is used by all SUNY colleges and universities to provide prospective and current SUNY students and their families a standardized financial aid award letter with clear, concise and common terms, definitions and financial aid award categories which will better educate students during a most critical time of their college career. SUNY Smart Track organized all SUNY schools based on the Student Information System (SIS) they were using (Banner, People Soft, Power Faids, Datatel and homegrown systems) and created user groups to network information and resources; SUNY Smart Track facilitated the creation of 2 templates (pdf and word) for use by SUNY campuses based on the feedback from the user groups (SUNY system created the pdf template and Columbia-Greene CC design staff created the Word template); SUNY Smart Track worked with and monitored all SUNY schools for compliance; * SUNY Smart Track Financial Literacy Website The U.S. Department of Education (DOE) states emphatically that a correlation exists between increased financial literacy and decreased delinquency and defaults in relation to student loan borrowing. DOE recognizes that schools play an important role to reach prospective and current students by offering financial literacy tools. This premise has been further supported by national research studies. Based on this research, SUNY System concluded that a standardized set of financial literacy tools available to all SUNY schools would produce the greatest efficiency for providing financial literacy to decrease delinquency and defaults; It was the most cost effective choice for all SUNY schools to procure a vendor to provide these tools on a customized SUNY Smart Track website as opposed to each school having to create or contract with a vendor to provide financial literacy for students; By providing easy implementation of a standardized set of financial literacy tools, all SUNY schools would be able to participate and reach the entire population of prospective and current SUNY students; and present a consistent set of financial literacy tools; The SUNY Smart Track Financial Literacy Website provides these attributes to all SUNY schools All SUNY schools have committed to using the SUNY Smart Track Financial Literacy website: o At present, 59 SUNY campuses have linked their school sites to the SUNY Smart Track Financial Literacy website * SUNY Smart Track Student Engagement Project SUNY Smart Track Student Engagement Project will engage those students, at the highest risk of default throughout their time on campus and beyond, including the borrower s grace period and applicable periods of loan delinquency. Student engagement communications will support ongoing campus retention efforts and available campus resources by engaging students at critical points during their freshman year, the time frame where at-risk students are most vulnerable to withdrawing. Students are identified by the use of data from the National Student Loan Data System (NSLDS). Currently, in production with two pilot campuses, Fredonia and Niagara County Community College, and will be expanded to include additional campuses in the coming weeks and months. The expectation is that all campuses will participate.

6 SUNY Stakeholders SUNY Smart Track will result in positive and measurable benefits for the following SUNY stakeholders: Admissions-Enrollment Management: SUNY s willingness and ability to provide new student and campus services is an effective admissions tool and should help to better recruit and retain students; Academic Affairs-Student Services: Student engagement communications will reinforce available campus resources and services which should increase student demand and improve campus retention and persistence rates; Financial Aid: SUNY Smart Track efforts will share default prevention efforts across the campus, with other campus stakeholders. SUNY Smart Track costs will be absorbed by the campus, and not just the financial aid office. This approach, which is widely accepted by the Department of Education, will better target the root causes of default across the entire campus, which is failure to achieve student success. Centralized SUNY Smart Track efforts will also reduce the administrative burden and/or costs that are incurred by financial aid offices that currently outsource delinquency resolution services or perform the activities using current staff. This will allow campuses to better re-allocate resources to direct services for students; Registrar-Business Office: New student engagement services should reduce campus 3rd party collections and improve campus Title IV receivables since Title IV funds are retained if students remain enrolled for the full academic period. Students who have access to ongoing financial literacy and financial management resources will have the needed budgeting and financial skills that will reduce overall student loan debt and campus cohort default rates across the SUNY System; Career Services: Students will be informed of available on-campus career services which will allow students to assess and seek early guidance regarding career fields, occupations and corresponding academic programs; Campus IT: SUNY Administration will work with campus IT offices to identify, enhance and/or implement appropriate measurement tools that will guide the ongoing development and enhancement of SUNY Smart Track services. Student Re-Engagement Pilot Project * Smart Track Withdrawn Borrower-Student Re-engagement Project There are 17 schools in the SUNY-Nelnet Withdrawal Project, whereby students who leave SUNY without graduating are contacted by Federal Loan Servicer Nelnet during the early stages of their grace period. The process requires each participating pilot campus to provide Nelnet with early monthly lists of withdrawn borrowers, representing loans the servicer currently holds. The 17 SUNY campuses are current schools that Nelnet works with and also represent the at-risk/high cohort default rate campuses in the SUNY System of 64 colleges and universities. Over 600 withdrawn borrowers have been contacted to date, where guidance was provided on how to return to college and/or how to establish an acceptable repayment schedule. Nelnet recently reported to System that project response rates have been greater than the industry average-proving that early outreach efforts can help borrowers who separate from SUNY before graduating. The unique and most important objective of this early outreach effort is "student re-engagement: whereby Nelnet encourages students to return to college as a means to mitigate default risk for former students and for SUNY colleges."

7 Part B - SUNY Smart Track Screen Shots

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9 Part C Three-Year Cohort Default Rate (CDR) and Students in Repayment Charts by SUNY Sector SUNY Research University Centers Cohort Default Rate (CDR) and Repayment Data School Name 2010 SUNY CDR 2009 SUNY CDR Default Default in Repayment in Repayment Univ. of Albany 4.50% 6.10% Binghamton 5.00% 3.00% SUNY Buffalo 5.40% 4.10% Stony Brook 5.00% 5.80% Totals 5.59% 4.90% SUNY Other Research/Doctoral Schools Cohort Default Rate (CDR) and Repayment Data School Name 2010 SUNY CDR 2009 SUNY CDR Default Default Repayment Repayment Upstate Med 0.30% 0.70% SUNY Optometry 1.40% 0.00% Downstate Med 2.10% 2.40% SUNY ESF 3.70% 3.90% Totals 2.24% 2.42%

10 Cohort Default Rate (CDR) and Repayment Data School Name 2010 SUNY CDR 2009 SUNY CDR Default Default in Repayment in Repayment Buffalo State 10.80% 11.10% SUNY Brockport 6.00% 3.50% SUNY Cortland 4.50% 3.40% Empire State 10.10% 10.70% SUNY Farmingdale 9.40% 9.10% SUNY Fredonia 6.40% 7.30% SUNY Geneseo 3.00% 2.80% SUNY Maritime 9.70% 9.00% SUNY Old Westbury 14.50% 18.00% SUNY New Paltz 6.60% 5.00% SUNY Old Westbury 14.50% 18.00% SUNY Oneonta 7.30% 7.30% SUNY Oswego 7.10% 7.60% SUNY Plattsburgh 6.00% 4.40% SUNY Potsdam 7.90% 6.30% SUNY Purchase 7.60% 7.60% Totals 7.67% 7.38%

11 SUNY Technology Colleges Cohort Default Rate (CDR) and Repayment Data School Name 2010 SUNY CDR 2009 SUNY CDR Default Default in Repayment in Repayment SUNY Alfred 11.40% 13.30% SUNY Canton 18.20% 14.70% SUNY Cobleskill 16.90% 16.10% SUNY Delhi 14.40% 13.90% SUNY IT 4.70% 3.90% SUNY Morrisville 19.00% 17.60% Totals 14.04% 13.28%

12 SUNY Community Colleges Cohort Default Rate (CDR) and Repayment Data (Page 1) School Name 2010 SUNY CDR 2009 SUNY CDR SUNY Students in Default SUNY Students in Default SUNY Students in Repayment SUNY Students in Repayment SUNY Adirondack 19.80% 19.20% Broome CC 18.90% 20.10% Cayuga CC 25.20% 14.10% Clinton CC 21.90% 23.70% Columbia Greene CC 21.50% 16.10% Corning CC 29.80% 24.30% Dutchess CC 19.00% 19.50% Erie CC 23.10% 22.00% FIT 7.50% 7.80% Finger Lakes CC 22.50% 20.50% Fulton Montgomery CC 23.50% 24.80% Genesee CC 20.90% 19.40% Herkimer County CC 19.00% 14.20% Hudson Valley CC 17.50% 11.80% Jamestown CC 18.50% 15.30% Jefferson CC 16.80% 17.00% Monroe CC 20.20% 15.90% Mohawk Valley CC 19.70% 20.30% Nassau CC 16.50% 13.00% Niagara CCC 19.20% 20.00% North Country CC 19.30% 21.90% Onondaga CC 19.70% 19.20% Orange CCC 17.10% 14.50% Rockland CC 19.10% 18.90% Schenectady County CC 22.90% 17.40%

13 SUNY Community Colleges Cohort Default Rate (CDR) and Repayment Data (Page 2) School Name 2010 SUNY CDR 2009 SUNY CDR in Default in Default SUNY Students in Repayment SUNY Students in Repayment Suffolk County CC 14.10% 16.40% Sullivan CC 29.80% 23.70% Tompkins Cortland CC 23.50% 25.70% Ulster CC 19.20% 21.70% Westchester CC 14.20% 17.00% Totals % 17.91%