It is important, as we go about the daily work of trying to make students better financial aid consumers, to think more holistically about the ways in which we can encourage their success. Here are some concepts to consider:
1. Retention is a default prevention strategy.
Most data indicates that borrowers who default didn’t complete their programs of study. The best way to prevent default is to improve retention, and default prevention and retention teams need to work together.
2. Financial literacy is a retention tool.
Financial literacy is typically seen as the responsibility of the financial aid office as a default prevention tool. But it’s a good idea to think of financial wellness education in the same way we think of orientation and first-year experience programs. We need to provide students with the information they need to manage their finances so that they can persist through their programs of study.
3. Take a “life of the student” approach to default prevention and retention efforts.
Consider incorporating these strategies into your default prevention and retention plans:
• Enhancing entrance and exit counseling.
• Incorporating multiple opportunities to talk to students about financial literacy.
• Encouraging students to proactively select an income-based repayment plan.
• Making sure you are communicating with borrowers during their grace period.
• Establishing peer mentoring as a way to provide information for students to be successful.
4. Successful default prevention efforts require institutional commitment.
Regardless of which committee or group is responsible for your institution’s default prevention plan, make sure to include representatives from various departments, such as career services, alumni relations, registration, faculty and others. Also make sure that your default prevention plan is capturing activities being done by others outside of the financial aid office.
5. Get the data right.
With increased transparency in consumer tools like College Navigator and College Scorecard, it is important to make sure the data reported is correct. It is also a good idea to review your National Student Loan Data System (NSLDS) data submission process to ensure accurate and timely submissions.
6. It is important to be able to manage multiple cohorts effectively.
With the release of the 2013 draft cohort default rates, your only opportunity to affect that cohort is through the appeals process. You can proactively manage the 2014, 2015 and 2016 cohorts through borrower communication strategies.