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

2. 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

3. 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 ). The rate is based on the number of borrowers who enter repayment during a single fiscal year.

4. 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

5. CALCULATING THE CDR
AS OF TODAY THE CURRENT COHORT FISCAL YEAR IS REPORTED AS A DRAFT IN FEBRUARY 2019 AND OFFICIAL IN SEPTEMBER 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)

6. 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%

7. SANCTIONS

8. 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.

9. 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]

10. DEFAULT PREVENTION TEAM

11. 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

12. 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

13. 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

14. 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.

15. 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
s 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

16. NSLDS DELINQUENCY REPORT

17. MICROSOFT ACCESS DATABASE

18. MICROSOFT ACCESS DATABASE OPEN BORROWERS TAB

19. MICROSOFT ACCESS DATABASE OPEN BORROWERS TAB

20. MICROSOFT ACCESS DATABASE ACTIVITIES REPORT BY STUDENT

21. MICROSOFT ACCESS DATABASE LOAN SERVICER INFO

22. MICROSOFT ACCESS DATABASE GENERATED LETTERS

23. MICROSOFT ACCESS DATABASE REPORTS

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

25. 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

26. 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
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
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.

27. 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
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.

28. 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

29. 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