Community College Strategies to Prevent Default

Transcription

1 Community College Strategies to Prevent Default Bryce McKibben Policy Analyst, ACCT Debbie Cochrane Research Director, TICAS Dr. Sheila Ruhland President, Moraine Park Technical College Dr. Dan Kinney President, Iowa Western Community College

2 National Three-Year Cohort Default Rates 25.0% 20.0% Community Colleges 20.6 % 15.0% 10.0% Fiscal Year Borrowers Entered Repayment National Average 13.7 %

3 Report Theory of Action Identify the problem: Analyze Cohort Data Develop the solution: Design, Implement, & Evaluate Default Reduction Strategies Improved outcomes: Reduced Default Rates

4 Report Overview 9 diverse colleges selected FY year CDR Data analysis & interviews Institutional profiles College practices & policies Federal policy recommendations 4

5 Summary of Findings Clear and strong link between NON-completion and default Across all colleges in survey: 9% of program completers defaulted, compared to 27% of those who did not complete 16% of borrowers who completed at least 15 credits defaulted, compared to 38% of those who did not complete 15 credits Efforts to promote student success & completion are default prevention efforts

6 Summary of Findings, Cont d Apart from completion, more differences than similarities: in default rates, gaps, and the make-up of borrowers Distribution matters: for example, program completers comprised 13% to 41% of borrowers entering repayment At some colleges, higher risk borrowers at some colleges defaulted at rates similar to lower risk borrowers Default prevention strategies are not one-size-fits all

7 7

8 Moraine Park TC: 3-Year CDR FY 2011 FY 2010 FY 2009 CDR 13.3% 14.6% 8.2% Defaulters Borrowers

9 Moraine Park s Data Just over one-third (37%) of borrowers entering repayment completed their program of study Completer CDR: 7% Non-Completer CDR: 19 % Students aren t borrowing until they have earned credits or borrowers persist until they have more But of the 1 in 10 of borrowers who did not attain 15 credits, default rate was 52%! Only 13% of borrowers entering repayment completed their required loan exit counseling 9

10 Reducing Default at MPTC! Existing Strategies:! Third-party partnership! Supplemental unsubsidized loan request! Outreach to delinquent borrowers! Consider:! Budgeting worksheets with loan forms! Targeted in-person advising to at-risk borrowers 10

11 11

12 Iowa Western CC: 3-Year CDR FY 2011 FY 2010 FY 2009 CDR 20.1% 23.6% 16.6% Defaulters Borrowers

13 Iowa Western s Data Although most borrowers (63%) complete their program of study, large divide on default Completer CDR: 10% Non-Completer CDR: 32 % High rates of remediation (58% of borrowers) Non-remedial CDR: 16% Remedial CDR: 29 % Pell Grant students at-risk Non-Pell CDR: 13% Pell CDR: 30 % 13

14 Reducing Default at IWCC! Existing Strategies:! Assembling campus-wide team! Federal loan request form! Tiered outreach to delinquent borrowers! Labor market analysis at program-level! Consider:! Emphasizing repayment options! Contact non-completers before delinquency! Target foundation scholarship funds 14

15 Institutional Policy Rec s Direct Loan participation is important Routine analysis of CDRs, tailored to college Default reduction as a campus-wide endeavor Consider and evaluate third-party partnerships Reexamine loan packaging policy College-driven borrower outreach strategies CDR appeals when necessary 15

16 Trustees Can: Ask for updates on annual CDR releases Request staff presentation, analysis of available federal loan data Review third-party contract rec s to board Encourage a diversity of options from admin

17 Federal Policy Recommendations Congressional Action Needed Streamline and simplify student loan servicing Single point-of-contact Auto-enroll severely delinquent borrowers in IBR Student Default Risk Index 17

18 Federal Policy Recommendations U.S. Department of Education Action Needed: Improve CDR appeals Enhance & exit counseling resources Make data sources (NSLDS) more user-friendly Study pro-rating federal loans based on enrollment intensity 18

19 Thank You! Download the report at For more information, contact: