Default Prevention: A Beginners Guide to Implementation PRESENTED BY: Dr. Melissa Vargas, ed. D. Njasfaa 2019 conference

AGENDA Understanding the Cohort Default Rate What is it? How is it calculated? Defining your Default Prevention Team Purpose Mission Statement Key Players Action Plan

Cohort Default Rate (CDR) For Title IV purposes, the Cohort Default Rate Guide (2018) defines the CDR as “the percentage of a school’s borrowers who enter repayment on certain Federal Family Education Loans (FFELs) and/or William D. Ford Federal Direct Loans (Direct Loans) during that fiscal year and default within the cohort default period” (p. 2.1-1). The rate is based on the number of borrowers who enter repayment during a single fiscal year.

CALCULATING THE CDR The rate is calculated by using the below formula: Borrowers in the cohort who default within cohort default period ________________________________________________ x 100 Cohort of federal student loan borrowers who enter repayment during cohort fiscal year

CALCULATING THE CDR AS OF TODAY THE CURRENT COHORT FISCAL YEAR IS 2016. REPORTED AS A DRAFT IN FEBRUARY 2019 AND OFFICIAL IN SEPTEMBER 2019. THE CDR WILL BE CALCULATED BY USING THE BELOW: Borrowers who entered repayment in the 2016 cohort AND defaulted in 2016, 2017 or 2018 (10/1/15 to 9/30/18) ________________________________________________ x 100 Cohort of federal student loan borrowers who enter repayment during cohort fiscal year of 2016 (10/1/15 to 9/30/16)

Understanding the CDR DRAFT RATE – sent out in February Only released to schools Allows the school an opportunity to appeal any discrepancies OFFICIAL RATE – sent out in September Released to both schools and the public 25%, 30 % AND 40%

SANCTIONS

DEFAULT PREVENTION PURPOSE The Default Prevention Initiative will be a proposal that will allow the University to create an effective and measurable strategy to reduce default risk.

DEFAULT PREVENTION MISSION STATEMENT The Default Prevention Initiative at [your] University is committed to providing thorough financial aid literacy, student loan information and default prevention guidance to both students and alumni with the objective of delivering effective student loan management and counseling while maintaining a Cohort Default Rate of [enter % here]

DEFAULT PREVENTION TEAM

Default Prevention Team YOUR MEMBERS YOUR JOB Senior School Official Representatives from: Student Affairs Financial Aid Enrollment Management Retention Student Representatives Determine the source of default risk Decide what steps to take to reduce risk Represent all parts of the institution that will contribute to risk reduction activities Allocate resources Assess effectiveness of your plan

Default Prevention Team YOUR RESPONSIBILITIES Have regularly scheduled meetings Assign specific responsibilities in conjunction with your plan Set deadlines to evaluate your progress Adjust the plan as needed Understand who is defaulting and why Create targeted, useful and measurable interventions while students are in school, in grace period, during repayment Create strategies that work to promote student success and reduce default CELEBRATE AND PROMOTE YOUR SUCCESSES

SAY YES TO THE PLAN Global default risk is not going away. It will most likely get worse over the next several years While outside services can help they can be costly. Students may be more responsive to members of the University Borrower risk is an inside job as it ultimately impacts the University School leadership must be prepared to devote internal resources (people and time) to solve this problem

CREATING A DEFAULT PLAN For the next 5-7 minutes I want you work in a group of 2 or 3 and develop a draft of what your default plan would look like.

CREATING A DEFAULT PLAN REPORTING \ RECORD KEEPING Obtain monthly Delinquency Reports from NSLDS Transfer Information into a readable Microsoft Excel Worksheet Sort the report by cohort, days delinquent, loan servicer Microsoft Access Database Load monthly Delinquency Reports into a Student Borrower Database Add an ACTIVITY button to allow us to track for reporting purposes: Phone calls placed Letters mailed Emails sent Student Meetings Default Aversion Self-Cure Microsoft Access Reports Activity Report – will provide us with most effective communication method Default Aversion Report – how many students did we save

NSLDS DELINQUENCY REPORT

MICROSOFT ACCESS DATABASE

MICROSOFT ACCESS DATABASE OPEN BORROWERS TAB

MICROSOFT ACCESS DATABASE OPEN BORROWERS TAB

MICROSOFT ACCESS DATABASE ACTIVITIES REPORT BY STUDENT

MICROSOFT ACCESS DATABASE LOAN SERVICER INFO

MICROSOFT ACCESS DATABASE GENERATED LETTERS

MICROSOFT ACCESS DATABASE REPORTS

EMAIL ACCOUNT Create a Default Prevention email account that will only be used for correspondence with students as it pertains to default information. An example of this email account could be: preventdefault@yourschool.com

FINANCIAL AID WEBSITE Your office’s website page should be updated with content to include: A link to financial literacy tools (including each servicer website link) A link to NSLDS A description of available payment options A link to the newly created Default Prevention email

OUTREACH Freshman & Continuing Students In School Counseling Exit Counseling One on One Student Counseling Financial Literacy Workshops held twice a semester Provide student loan entrance counseling workshops held during summer and beginning of the semester Email current Seniors reminding them to complete Exit Counseling, information about workshops, NSLDS use Student Loan exit counseling workshops for graduating seniors held during fall, winter and spring graduation times Financial Literacy workshops Email or mail packets with information about NSLDS, financial literacy and exit counseling If timing allows – at least once a semester, set up meeting times with students so that they have an opportunity to meet with primary Default Prevention representative to discuss individual loan information, help with exit counseling, etc.

OUTREACH Withdrawn and/or Graduated Students Default Team Support Exit Counseling Grace Period Counseling Work with Retention Office to talk to students BEFORE they withdraw from school Work closely with the Registrars Office and receive reports regarding students: 1) enrollment status; 2) withdrawal date; and 3) upcoming graduation date Student Loan exit counseling workshops for graduating seniors held during fall, winter and spring graduation times Financial Literacy workshops Email or mail packets with information about NSLDS, financial literacy and exit counseling Provide students with their loan servicer information, NSLDS information and payment reminder notices at the onset of the grace period and at 3 months and finally at 30 days.

COMMUNICATION IS KEY Communication with your Default Prevention Team is important Communication with other university stakeholders is important Continued communication with students is VERY IMPORTANT

FINAL THOUGHTS Have a team of different office representatives Keep open communication Create a plan that is ACTIONABLE, MEASURABLE and DO-ABLE DO NOT BE AFRAID TO FAIL CELEBRATE VICTORIES