In the world of federal student loan repayment, graduates have the upper hand. So do young adults well-schooled in the ways of money management.
Tusculum College in Tennessee understands that, particularly since working with the experts at Inceptia—leaders in financial education, default aversion and financial aid management services. Inceptia’s mission is to increase the financial aptitude of students, improve graduation rates and provide financial education and financial aid management services. Inceptia’s goal: 100 percent repayment of federal student loans.
“If a student does not graduate from college, they are significantly more likely to default on a student loan,” explains Ted Lannan, senior market research analyst at Inceptia. “Our analysis helps predict who is at risk of dropping out and defaulting on loans.”
Inceptia researched Tusculum’s student information—including high school location, high school grade point average, ACT/SAT scores, socioeconomic background and college major—to help the college determine how best to position undergrads for academic and financial success.
“Inceptia was able to take 10 years of our data, analyze it and show us the traits of students who were defaulting,” says Thomas H. Stein, vice president of enrollment management at Tusculum College. “We took those results and adjusted our recruiting efforts so we would attract students who would do best at Tusculum. For example, we found that students with about a 3.0 GPA and 23 ACT score could easily make it here and therefore would be more likely to repay their loans upon graduation.”
Colleges and universities are under the gun to reduce loan default rates, not only because they indicate to prospective students whether or not the college has sound financial aid policies and student support services, but because the federal government can block loans from being offered at schools with very high default rates.
Tusculum’s four campuses have about 1,900 undergrads—90 percent of whom receive some sort of financial aid. The school began its partnership with Inceptia in September 2010 to address the college’s loan default rate, which hit 13 percent the prior year. By June 2011, the college’s default rate dropped to 9.8 percent, well on its way to the 5 percent national average for similar schools.
“Inceptia helped us understand the default characteristics of our current students. This allows us to better focus on students where we know we can make a real difference,” Stein says.
Tusculum College continues to look to Inceptia for guidance and services in financial aid that benefit the college and students, and will explore its additional services in the future. “We offer comprehensive financial education services—an online program, in-person seminars and a certification program for school staff and peer counselors—covering a number of topics, including credit cards, budgeting, debt, loan repayment and money management,” Lannan says. “The idea is that if students are more informed, they will better manage their money, be better consumers and repay their student loans.”
In addition to a wide array of assessment products, Inceptia helps colleges implement or revamp programs such as freshman orientation or counseling to help retain students and get them to the finish line. Through comprehensive data analysis, financial education, default prevention and financial aid management, Inceptia is working toward helping all students, not just borrowers, become financially responsible adults.
To learn more about Inceptia, please visit www.inceptia.org.