Team effort needed for collecting loan default data

Team effort needed for collecting loan default data

Institutions are typically not using completion data to drive default prevention strategies, researcher says

Institutions that are successful in preventing loan defaults make it a campuswide effort, according to a recent survey by the Association of Community College Trustees (ACCT) and The Institute for College Access & Success (TICAS).

Nine community college administrators from institutions of varying sizes and locations were asked about traits of their borrowers and defaulters, as well as about default prevention efforts.

“To keep students in the know about their loans and thus minimize default risk, the president’s office, data teams and even faculty—not just the financial aid office—should all disseminate information about borrowers,” says Bryce McKibben, policy analyst for ACCT.

When examining populations at risk of default, completion was the only common thread. Of the surveyed colleges, only 9 percent of borrowers who completed their program later defaulted, compared to 27 percent who did not complete. The percentages of default for those who received Pell Grants or took remedial coursework varied by institution.

Unfortunately, institutions are typically not using completion data to drive default prevention strategies, says Debbie Cochrane, research director for TICAS. “Many of the colleges inform borrowers about exit counseling only at graduation time. What about those who drop out midterm?”

Colleges that are most successful at default prevention have a culture of data, says McKibben. “They are capable of analyzing cohort default rates at any time and can pull up all borrowers’ delinquency statuses and where they are with entrance and exit counseling,” McKibben says. “They can use that information to tailor strategies to where borrowers are.”

The full report, “Protecting Colleges and Students: Community College Strategies to Prevent Default,” can be found at http://tinyurl.com/ticassurvey.


Advertisement