1. ASSESSING YOUR DEFAULT AVERSION PLAN
Champions of Financial Aid ILASFAA Conference

2. Champions of Financial Aid - 2017 ILASFAA Conference
Anticipated Outcomes
Explore basic qualitative research of FAAs on best practices on lowering cohort default rates
Influence of federal policy
Outlining components of a Default Aversion Plan
Impact on policies & procedures – daily business operations
Champions of Financial Aid ILASFAA Conference

3. Qualitative Research: Best Practices in Default Aversion
Basic Qualitative Research using Transtheoretical Behavior Model with FAA interviews
Different experiences in terms improving borrower awareness

4. Building the Framework & the Conversation
Institutional response to changing borrower demographics
Identifying “at risk” borrowers
Identifying human capital needed w/limited resources
Improving borrower awareness (direct vs. indirect costs, loan types, limits)

5. Quantitative Research: Training Model to Infuse Enrollment Management
in-depth statistical analysis to identify students
data analysis can demonstrate that every student is a potential loan repayer or defaulter
Data can support financial aid staff in strategically engaging the campus community
Borrow
Do not borrow
Repay student Loans
Default on student loans

6. Statistical Framework
cross-departmental data analysis to examine the following student characteristics:
Demographic data for prospective and current students
Loan repayment patterns for freshmen
Satisfactory academic progress (SAP)
Grade point average (GPA) and default rates
Cohort graduation rates

7. Themes: Part One – Borrower Profile
varying degrees of financial literacy
aggregate loan totals
household incomes
shifting attitudes towards adopting one’s repayment obligations
socioeconomic factors increase the amount of student loan debt accrued by low-income students and ultimately lead to higher incidences of default
Residential housing

8. Themes: Part Two- Awareness
Counseling practices should be a reflection of borrower circumstances and take into account whether they are dependent or independent
use of loan request process, based on the principals of social liberation has been effective in mitigating unnecessary student borrowing
The exit counseling process provides student borrowers with relevant information regarding their aggregate loan totals, various repayment options, anticipated monthly repayment amounts and information regarding possible consolidation, forbearance and deferment options
“at risk” borrowers attend a mandatory entrance loan counseling session, while borrowers deemed to be less risky complete and online loan counseling session

9. More on Awareness

10. Themes: Part Three - Compliance
institution’s benefit greatly from the tuition paid by student loan assets and therefore must assume the greatest share of liability in making sure that student borrowers can be gainfully employed
By adding a third year to its cohort default rate calculation, the federal government is introducing a revised position in regards to how long higher education institutions should be held accountable for students who default
non-school related factors that have been shown to influence student default (borrower characteristics, regional job market, economy)
concerns over federal sanctions is the most commonly cited reason for community colleges to withdraw their participation from the Federal Direct Loan Program

11. Themes: Part Four – At Risk
high amount of loan debt
not doing well academically
withdraw – officially or unofficially from the college prior to obtaining their degree
borrow for expenses other than direct costs
GED as opposed to a regular high school diploma
low class rank

12. Components of the Plan
Current cohort default rate, national average, state average and institutional type average
Financial Literacy for Borrowers
Early Identification and Counseling for Students at-Risk
Communication Across Campus
Default Prevention and Retention Staff Default Prevention and Retention Staff
Alumni Survey on Gainful Employment by degree program
Default Rate history

13. Impact on Policies & Procedures
Automated Budget and Packaging Philosophy
Allowable budget adjustments
Household Income falling below poverty guideline
Dependent vs. Independent
Living on campus vs. Off campus
In Person Borrower Interviewers
Loan Request Process
Campus based
Federal Direct Loans
Private Loans

14. Results of the Plan Number of ‘at risk’ borrowers declines
Number of borrowers remain level but loan indebtedness declines
Number of unsubsidized loans and/or private loans declines
Partnering offices encourage potential borrowers to meet with the Financial Aid Office prior to borrowing
Number of classroom presentations to first year and graduating students increase
Number of students who decline loan offers
What were your strategies? When did you say you were going to test them? What was the outcome?
Presentations to administrative team or retention team on SAP or gainful employment?

15. Research
Lewis, B.J. (2015). Connecticut Community College Default Aversion Strategies: An inquiry into the perceptions of financial aid administrators in influencing student repayment behavior. Texas Guaranteed Student Loan Corporation (2007). A Clear and Present Danger to Institutional and Student Success: A training model for embedding student loan default aversion within strategic enrollment management.

16. Available for Questions
Maureen ‘mo’ Amos
Executive Director of Financial Aid
Northeastern Illinois University
For copy of institution Default Aversion Plan send request
Champions of Financial Aid ILASFAA Conference