Use This Blueprint for Default Prevention Success

Submitted by: Shannon Cross, USA Funds account executive

What actions should your school take to prevent student loan default and lower your cohort default rate? While the specifics may vary according to school, there is a set of tried-and-true general approaches that should serve as a blueprint for any default prevention action plan.

1. Communicate with your borrowers. Communicate early and often to share default prevention information with students and borrowers. Give them a steady diet of messages that help them stay out of trouble in repaying their student loans — and educate them about how to get help if they do encounter problems in repayment. Work with others at your school to decide how and when you’ll share these messages, and who’s responsible for the communications.

2. Focus on retention and student success. Since failure to complete a degree or certificate still is the highest overall risk factor for default, help your school to develop ideas and initiatives for retaining students and seeing them through to graduation. Then, once students have graduated, let students know you’re there to support them and help connect them with resources if they need repayment help.

3. Target your default prevention at high-risk students. Your time and your resources are limited. Find ways to target your default prevention efforts to achieve maximum benefit and the best possible outcome for your borrowers. The best way to target your efforts is to identify your borrowers most at risk of defaulting and focus on the borrowers you’re most likely to be able to help.

4. Make data-driven decisions. To figure out where to focus your default prevention efforts, you’ll need more than guesswork. You need data so you can make good decisions about where to put that limited time and resources to best use.

5. Analyze borrower records. You have myriad types of student and loan data at your disposal, so analyze that data. Dig deeply into the information to look for trends and correlations in student loan default at your school. It’s only after you identify the problems that you can begin to identify the best default prevention solutions for your borrowers.

6. Assess the effectiveness of your efforts. This last step in the action plan is one many schools overlook. Make sure to review what you’ve done in your default prevention efforts, and when. Use data to determine if what you’re doing is working. If it is, keep doing it. If it isn’t, make some changes and then, as always, let the data tell you what is — and isn’t — working.

If you need help developing your default prevention action plan, visit There you’ll learn more about USA Funds’ default prevention tools and solutions for borrower communication and financial literacy training.