4 Ways to Lower Your Cohort Default Rate
Information provided by Stephanie Mackeprang, Public Relations
The headlines are everywhere: “Cohort Default Rates Rise for Sixth Year.” Although it comes as no surprise to administrators and industry experts, the rising default rate adds another burden to already taxed financial aid offices.
Now that the rates are out and published, what can schools do now to curb future rates? No matter if your school’s rate is rising or maintaining, these four tactics will make a positive impact on your future default rate.
Track Your Rate Year Round
Upload your School Portfolio report to the Cohort Activity Report system, a free service provided by Inceptia, to receive current data on open cohort default years and monitor borrowers in repayment and default. This report will also show the impact one default borrower has on your rate and the number of borrowers needing rescue to impact your rate by one percent.
Conduct Analytics
Gathering data on student population trends can help schools understand the default characteristics of students. Trend analysis identifies borrowers in jeopardy so schools can focus on meeting the financial education needs of the students that need it the most.
Promote Financial Education
Financial education is the best way to impact future default rates. The more students know about budgeting, borrowing and credit cards the less likely they will default on their loans. Whether your school hires an outside vendor or uses internal staff, be sure your students are being taught by a certified personal financial manager (CPFM) and have access to online resources.
Contact Student Borrowers
One-on-one counseling will help delinquent borrowers get back on track. Through grace counseling or default prevention outreach, a direct connection can make a huge impact on students’ lives. Before you reach out to borrowers, you will need a contact strategy—letters, emails, phone calls or a combination of all three. Once the contact method has been determined, you will want to ensure you are complying with the Fair Debt Practices Collection Act (FDPCA) for your own protection. Read Contacting Student Borrowers for more tips.
Although not much can be done about the FY 2010 3-year and FY 2011 2-year cohort default rates now, there are steps you can take today that will impact future rates. Be sure to take advantage of Inceptia’s free Cohort Activity Report.
The Oz-Sociated Press 