USA Funds

Creating Effective Default Prevention Strategies

Maintaining frequent borrower contact is essential to reducing an institution’s cohort default rate

Identifying students who are at risk of student loan default and establishing ongoing communication with those students are two key strategies for minimizing borrower default. Financial aid administrators should include these strategies and more in their default prevention programs, so borrowers are aware of their repayment options and less likely to default. This web seminar, originally broadcast on January 28, 2014, featured administrators from two institutions. They described the tools and strategies they have employed to curb loan defaults.

Spartan College of Aeronautics and Technology: Keeping default rates down through clear communication

USA Funds Borrower Connect organizes borrower and loan information, helping financial aid staff focus on outreach

Maintaining frequent contact with student loan borrowers is a challenge at any institution, regardless of size. At the 725-student Spartan College of Aeronautics and Technology in Tulsa, Okla., the three-year cohort default rate was commonly between 25 and 27 percent. “Our rate was so high because we had no easy way to communicate electronically with our borrowers,” says Dean Riling, vice president of administration. “Our accounts system did not connect with student email addresses.”

Borrower Communication: Outsourcing Solutions

Connecting with and educating student borrowers

Communicating with student loan borrowers helps support the successful repayment of loans and can improve an institution’s cohort default rate. If staffing limitations prevent your institution from connecting with your borrowers, partnering with external vendors may be the solution.