1. Protecting Colleges and Students Protecting Colleges and Students Community College Strategies to Prevent Default Jee Hang Lee VP for Public Policy & External Relations, ACCT Matthew La Rocque Research Analyst, TICAS Michael Copenhaver Director of Financial Aid, Grossmont College Helen Faith Director of Financial Aid, Lane Community College 1

2. National Three-Year Cohort Default Rates 2

3. 3 Borrowing Rates by Sector

4. Student Borrowing at Two-Year Public Institutions 4 Data From NPSAS:12

5. Identify the problem: Analyze Cohort Data Develop the solution: Design, Implement, & Evaluate Default Reduction Strategies Improved outcomes: Reduced Default Rates Report Theory of Action 5

6. Report Overview 9 diverse colleges selected FY 2010 3-year CDR Data analysis & interviews Institutional profiles College practices & policies Federal policy recommendations 6

7. 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 7

8. Summary of Findings, Cont’d Apart from completion, more differences than similarities: in default rates and the make-up of borrowers At some colleges, “higher risk” borrowers defaulted at rates similar to lower risk borrowers Distribution matters: for example, program completers comprised 13% to 41% of borrowers entering repayment Default prevention strategies are not one-size-fits all 8

9. El Cajon, California; Grossmont-Cuyamaca CCD Fall 2013 enrollment: 18,618 undergrads 2014-15 In-State Tuition & Fees: $1,387 2012-13 Average Net Price: $3,784 Receive Pell grants: 23% ($14.2M) 3% Receive federal student loans: 3% ($1.5M) Students of color: 56% College Navigator data as of March 2015 9

10. Grossmont College’s 3-Year CDR FY 2011FY 2010FY 2009 CDR14.2%20.7%19.8% Defaulters607274 Borrowers422347373

11. Grossmont’s Data Nearly three-quarters (72%) of borrowers entering repayment failed to complete their program – Completer CDR: 7.8% | Non-Completer CDR: 25.0% Diving deeper on non-completion – Half of non-completers left mid-term (CDR: 30.1%) – Suggests need for early-warning indicators High rates of remediation: 7 in 10 borrowers were in remediation at some point – College-ready CDR: 13.6% | Remedial CDR: 23.0% 11

12. Reducing Default at Grossmont  Existing Strategies:  Federal loan request form (no auto-packaging)  Supplemental counseling and budget worksheets for borrowers with high debt loads ($10,500+)  Institutional surveys and focus groups to understand students’ financial challenges  Consider:  Focus on exit counseling completion  Use analytics to inform targeting  Coordinate with & implement statewide efforts 12

13. Eugene, Oregon Fall 2013 enrollment: 11,002 undergraduates 2014-15 In-State Tuition & Fees: $3,988 2012-13 Average Net Price: $8,505 Receive Pell grants: 59% ($32.8M) Receive federal student loans: 71% ($46.1M) Students of color: 22% College Navigator data as of March 2015 13

14. Lane College’s 3-Year CDR FY 2011FY 2010FY 2009 CDR30.2%30.6%19.5% Defaulters1,202952461 Borrowers3,9733,1052,357 14

15. Lane’s Data Most borrowers (87%) and even more defaulters (96%) failed to complete their program – Completer CDR: 9.8% | Non-Completer CDR: 33.7% 65% of borrowers were independent and they had a higher default rate than dependent students – Dependent CDR: 22.2% | Independent CDR: 35.3% Cohort represents enrollments spanning several years Relatively large gap in default rates for Pell recipients 15

16. Reducing Default at Lane  Existing Strategies  Mandatory orientation advising  Unsubsidized loan requests  Credit limit appeals  Academic progress monitoring  Transcript holds for exit counseling  Analysis of borrowing trends  Default aversion tools and platforms  CDR appeals 16

17. Reducing Default at Lane  Pending Strategies:  Considering additional vendor services  New default prevention coordinator position  Integrating default prevention into campus advising  Strategies to Consider (from CDR report):  Default prevention & outreach for non-completers  Expand use of student budgeting exercises  Analyze exit counseling completion 17

18. Institutional Policy Recommendations 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 18

19. Federal Policy Recommendations Make data sources (NSLDS) more user-friendly Improve CDR appeals Enhance entrance & exit counseling resources Streamline and simplify student loan servicing Study pro-rating federal loans by enrollment intensity Auto-enroll severely delinquent borrowers in IBR Student Default Risk Index 19

20. Thank You! Download the report at www.acct.orgwww.acct.org For more information, contact: jhlee@acct.orgmlarocque@ticas.org 202.775.4667510.318.7900