Transcript A7 WhoIsAtRiskForDefault StrategiesForDefaultPrevention

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
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National Three-Year Cohort Default Rates
25.0%
CCs: 20.6 %
20.0%
15.0%
US: 13.7 %
10.0%
2009
2010
2011
Fiscal Year Borrowers Entered Repayment
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Borrowing Rates by Sector
Public 2-Year
17%
Private 4-Year
60%
Public 4-Year
48%
Private For-Profit
71%
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Student Borrowing at
Two-Year Public Institutions
18%
16.7%
$5,000
16%
14%
$4,700
12%
$3,000
10%
8%
$2,000
6%
4%
2%
$4,000
$1,000
Percentage Borrowing
Average Amount Borrowed
0%
$0
1989-90
1992-93
1995-96
1999-00
2003-04
2007-08
2011-12
Data From NPSAS:12
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Report Theory of Action
Identify the problem:
Analyze Cohort Data
Develop the solution:
Design, Implement, & Evaluate
Default Reduction Strategies
Improved outcomes:
Reduced Default Rates
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Report Overview
• 9 diverse colleges selected
• FY 2010 3-year CDR
• Data analysis & interviews
• Institutional profiles
• College practices & policies
• Federal policy recommendations
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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
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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
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• 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)
• Receive federal student loans: 3% ($1.5M)
• Students of color: 56%
College Navigator data as of March 2015
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Grossmont College’s 3-Year CDR
FY 2011
FY 2010
FY 2009
14.2%
20.7%
19.8%
Defaulters
60
72
74
Borrowers
422
347
373
CDR
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%
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Reducing Default at Grossmont
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Existing Strategies:
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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:
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Focus on exit counseling completion
Use analytics to inform targeting
Coordinate with & implement statewide efforts
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• 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
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Lane College’s 3-Year CDR
FY 2011
FY 2010
FY 2009
CDR
30.2%
30.6%
19.5%
Defaulters
1,202
952
461
Borrowers
3,973
3,105
2,357
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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
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Reducing Default at Lane
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Existing Strategies
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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
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Reducing Default at Lane
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Pending Strategies:
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Considering additional vendor services
New default prevention coordinator position
Integrating default prevention into campus advising
Strategies to Consider (from CDR report):
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Default prevention & outreach for non-completers
Expand use of student budgeting exercises
Analyze exit counseling completion
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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
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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
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Thank You!
• Download the report at www.acct.org
• For more information, contact:
[email protected]
202.775.4667
[email protected]
510.318.7900