The 5 W s of Student Loan Defaulters: Using Analytics to Form Your Default Prevention Strategy. Strategic Business Director

Transcription

1 Using Analytics to Form Your Default Prevention Strategy Presented by: Ron Lee OASFAA Conference 2015 What are the 5 W s? Who is defaulting? Why are they defaulting? What tactics are you currently using to improve student success? Where can improvements be made? When is it most effective to reach student borrowers? 2 Using Analytics to Form Your Default Prevention Strategy 1

2 A major part of any plan is to periodically review progress in preventing defaults. One element of this review is a comprehensive analysis of defaulters who is defaulting and why. Schools can then use this information to improve their default prevention and management practices and initiatives. -Department of Education Sample Default Management Plan 3 UNDERSTANDING COHORT DEFAULT RATES 4 Using Analytics to Form Your Default Prevention Strategy 2

3 What s in a Cohort Default Rate? Borrowers in the cohort who default within the 3 year cohort period (Numerator) Cohort of federal student loan borrowers who enter repayment during cohort fiscal year (Denominator) X 100 = CDR 5 Cohort Year 2012 October 1, 2011 Enter Repayment September 30, 2012 September 30, 2013 September 30, 2014 Track Default Status 6 Using Analytics to Form Your Default Prevention Strategy 3

4 Open Cohort Years 7 STATE OF THE INDUSTRY 8 Using Analytics to Form Your Default Prevention Strategy 4

5 Trends in Student Borrowing Amount of Loans (in Billions) $52 $56 $64 $74 $83 $88 $92 $101 $103 $116 $120 $118 $110 Source: Trends in Student Aid 2013, The College Board 9 How big is the problem? Student Loan Debt (in Billions) $516 $577 $657 $750 $848 $948 $1,040 $1, Jun-14 Source: National Student Loan Data System (NSLDS) 10 Using Analytics to Form Your Default Prevention Strategy 5

6 Average Student Loan Debt 11 Student Loans in Trouble Delinquency / Default 18% Bankruptcy / Disability 1% Forbearance 15% Current on payments 49% Deferment 18% Source: Federal Reserve Bank of New York, Household Debt and Credit Q2, Using Analytics to Form Your Default Prevention Strategy 6

7 13 National Three-Year Cohort Default Rate 11.8% 12.3% 13.4% 14.7% 13.7% Cohort Default Rate 8.4% 9.2% FY05 FY06 FY07 FY08 FY09 FY10 FY11 * Three-year rates are trial rates for FY05 through FY08 and became official for FY Using Analytics to Form Your Default Prevention Strategy 7

8 National Cohort Default Rates by Sector 2009 CDR 2010 CDR 2011 CDR 22.7% 21.8% 19.1% 18.3% 20.9% 20.5% 9.3% 8.9% 7.9% 7.5% 8.2% 7.2% Proprietary Public Two Public Four Private 15 Cohort Default Rates Proprietary Institutions 2009 CDR 2010 CDR 2011 CDR 22.7% 21.8% 19.1% 20.8% 18.2% 17.7% National Oregon 16 Using Analytics to Form Your Default Prevention Strategy 8

9 Cohort Default Rates Private Institutions 2009 CDR 2010 CDR 2011 CDR 7.5% 8.2% 7.2% 4.6% 3.5% 3.6% National Oregon 17 Cohort Default Rates Public Two Year Institutions 2009 CDR 2010 CDR 2011 CDR 24.0% 18.3% 20.9% 20.5% 20.4% 21.5% National Oregon 18 Using Analytics to Form Your Default Prevention Strategy 9

10 Cohort Default Rates Public Four Year Institutions 2009 CDR 2010 CDR 2011 CDR 7.9% 9.3% 8.9% 5.8% 7.0% 6.3% National Oregon 19 COMPREHENSIVE ANALYSIS OF DEFAULTERS RESEARCH STUDY 20 Using Analytics to Form Your Default Prevention Strategy 10

11 Why Analyze Your Data? Benchmark Profile Magnitude of the Problem Target Resources Ongoing Success 21 Cohort Default File Analysis Up to 71 variables 1, 2 or 3 years Benchmark Report Tracking changes with each new CDR file Who is defaulting? 22 Using Analytics to Form Your Default Prevention Strategy 11

12 Cohort Default Research Project 16 Institutions Four-Year College Sample 11,630 borrowers total 6,707 borrowers did not complete a degree (58%) 4,923 borrowers completed (42%) Two-Year College Sample 15,013 borrowers total 11,414 borrowers did not complete a degree (76%) 3,599 borrowers completed a program or degree (24%) 23 Completion is paramount! 24 Using Analytics to Form Your Default Prevention Strategy 12

13 Two-Year Schools Who is defaulting? 27% Default Rate 11% Drop Outs Completers 25 Two-Year Students Non-Completers Segment Default Rate All Non-Completers 27% Pell Eligible 42% Academic SAP 1 st Term 38% 1 st Term GPA <1.0 37% 1 st Term Credits Completed <50% 35% Needed English Remediation 34% Male 32% Students of Color 31% 26 Using Analytics to Form Your Default Prevention Strategy 13

14 Two-Year Students Completers Segment Default Rate All Completers 11% Cumulative GPA <2.0 38% Personal & Culinary Services 37% Construction Trades 26% Have Completed <70% of Credits Attempted 21% 27 Four-Year Students Who is defaulting? Default Rate 20% 6% Drop Outs Completers 28 Using Analytics to Form Your Default Prevention Strategy 14

15 Four-Year Students Non-Completers Segment % Default All Non-Completers 20% 1 st Term Credits Completed <50% 35% Cumulative GPA <1.0 34% Academic SAP 1 st Term 30% 1 st Term GPA <2.0 29% Needed Remediation 25% 29 Four-Year Students Completers Segment % Default All Completers 6% English Language & Literature 12% Foreign Languages 12% Less than 70% Credits Completed 10% Area, Ethnic & Group Studies 10% Low Income (Family Income <$30K) 9% Cumulative GPA % 30 Using Analytics to Form Your Default Prevention Strategy 15

16 TACTICS TO IMPROVE STUDENT SUCCESS 31 Where and What Improvements Can Be Made? 1. Make a list of current strategies and processes. 2. Be proactive! Understand the unique characteristics of your at-risk borrowers Create a default prevention plan (whether required by the ED or not). Implement or enhance financial education programs and borrower communication outreach. 32 Using Analytics to Form Your Default Prevention Strategy 16

17 U.S. Department of Education Default Prevention Plan Requirements An effective default prevention and management plan (required or not) can ensure your students have the financial tools required for successful student loan repayment. Default Prevention Taskforce Create Default Prevention and Management Plan Measureable Objectives Department of Education Approval 33 Possible Strategies Financial Education Comprehensive online financial education program Life stage-appropriate topics Peer-to-peer advising First-year experience class Alumni services 34 Using Analytics to Form Your Default Prevention Strategy 17

18 Possible Strategies Borrower Outreach Clear communication In-person counseling Grace program Delinquency program s Letters Phone calls 35 Possible Strategies Others SAP analysis Grant opportunities Early 150% tracking NSLDS appeals Cohort Activity Report 36 Using Analytics to Form Your Default Prevention Strategy 18

19 Using Analytics to Form Your Default Prevention Strategy 19

20 Presentation Starter Kit 39 Cohort Activity Report 40 Using Analytics to Form Your Default Prevention Strategy 20

21 Comparison Chart 41 Impact Report 42 Using Analytics to Form Your Default Prevention Strategy 21

22 CDR Tool 43 Selecting the Right Partner 44 Using Analytics to Form Your Default Prevention Strategy 22

23 QUESTIONS 45 CONTACT INFORMATION Ron Lee office cell Follow us on 46 Using Analytics to Form Your Default Prevention Strategy 23