Student Loan Default Prevention & Management. Community College of Aurora May 10, 2012

Transcription

1 Student Loan Default Prevention & Management Community College of Aurora May 10, 2012

2 Agenda Default Overview Consequences of Default Research CCA Situation Current Approach Solution Trends/Options Recommendations for CCA

3 Student Loan Default Student loan borrowing is increasing Default rates are increasing Contributing factors to default Lack of financial literacy Student success (grades, retention, graduation) High unemployment Difficult process to maneuver

4 Consequences of Default Student Lose financial aid eligibility Lose right to deferment and forbearance Collections Damage credit history May hinder employment opportunities May have payments deducted from wages Institution Could lose Title IV program eligibility

5 Research Delinquency and failure rates will rise in coming years because many students will be unable to service their loans as income growth falls short of borrowers' expectations. (MSN Money Partner, 8/15/11). Student Loan debt outpaced credit card debt for the first time last year (NY Times, 4/11/11) Unless schools are going to spend more resources on default prevention it will continue to be a problem (Huffington Post, 8/17/11)

6 CCA

7 CCA

8 CCA Student Default CCA cohort default rate is 21.4% # Days Delinquent # Students Total 543

9 National Default Rates

10 Solution Trends Outsource default services Example OJC: Nelnet Diversified Solutions (NDS) Financial wellness and default prevention Estimated base $38,000-$42,000/yr Recent product with no data to support success PPCC, PCC, CCD, RRCC- Hired staff to oversee oncampus default services

11 Current Approach Online entrance counseling required Exit counseling recommended Workshops on student loan awareness Information available to students on NSLDS Assisting loan servicers with student change of address Including student loan information in basic financial aid training to all staff As time allows, helping students contact lenders and servicers for default options

12 Recommendations for CCA Create a College Wide Task Force Admissions Registrar Cashier s office Financial Aid Instruction Career Services Information Central Institutional Research

13 Other things we are currently CCA Address issues of Fraud Identify At Risk Borrowers Required Orientation Notification of no show students. Holds Coursework to include financial literacy, default prevention.

14 Next Steps: We want your help in keeping our students on a healthy track from start to finish. Discussion: Next meeting date:

15 Minutes Community College of Aurora Default Prevention Management Team From Regular Meeting 02/11/11 Board Members: Present: Andrew Marah, Jodi Allen, Deb Hoefler, Mason Parmenter. Proceedings: Call to Order at 10:33 a.m. by Deb Hoefler Discussion: The committee discussed steps in implementing the Default Prevention Workshops. Andy used the term discrimination without roadblocks to describe the method of identifying high-risk students and helping them to prevent default before it happens. The committee also discussed the possibilities of holding a Default Prevention Week every fall and spring before disbursement. Other ideas included Early Alerts and /reminders for high-risk students, posting FAQ s and loan calculators on the website, and sending out links to edwise.org on the award letters. The committee finally discussed follow-up tactics and what kind of incentives to offer students? Conclusions: The committee decided that we must find a way to encourage students to voluntarily accept the information about default prevention. We would like to involve Libby Kingsmith, Cheryl Waite and Michael Broadbent with this project so that we can utilize the Early Alert feature in the form of postcards/ s/reminder lists, etc. We want to implement these techniques soon; first by posting edwise.org links on the award letters, as well as advertising webinars that will be offered the next 2 Mondays. Next, we decided to create FAQ screen savers and power points to show around the office and in the FAFSA lab, also. We hope that this will grab the attention of students who come into the office. Finally, the committee decided to offer some sort of incentive to students after the Default Prevention Workshop was given. The committee decided on jump-drives from College Invest, which may have the default prevention power point presentation already installed! (Deb was going to check with College Invest to see if that would be possible. Meeting adjourned at 11:35 a.m. Next regular meeting scheduled for sometime in April.

16 Minutes Community College of Aurora Default Prevention Management Team From Regular Meeting 12/16/10 Board Members: Present: Andrew Marah, Jodi Allen, Allison Cepello, Deb Hoefler, Mason Parmenter. Proceedings: Call to Order at 3:08 by Deb Hoefler Default Prevention Ideas: Andy presented ideas from Default Prevention.com, Allison had money management ideas from FAME (Finance Authority of Maine,) Jodi suggests we develop a loan reminder presentation/counseling session for students, Deb wants to initiate default prevention awareness programs and post an FAQ section on the website, and Mason provided ideas from Education Cents website for videos. Discussion: The committee discussed the possibilities of identifying high risk students without discriminating. The committee also explored options of how to profile and run specific reports in order to distinguish the demographics of those who are at high risk of default. It was also decided that we would run lists from NSLDS to discover who is currently or about to be in default, so that we may contact and notify those students, to help them back on track. Conclusions: It was decided by the committee that we should post loan calculators for students on our website for budgeting and borrowing purposes. We would also like to post some related links for students to reference, and we hope this might discourage students to take the max loan when they don t need it. The committee also went as far as to suggest that we target the high schools in the areas of high default, and offer presentations about borrowing for college. Misc: Nothing to report. Meeting adjourned at 4:11 p.m. Next regular meeting scheduled for sometime in February.