Spartan College of Aeronautics and Technology: Keeping default rates down through clear communication
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.”
Riling had worked with USA Funds as a guarantor while working at a different institution. “At that school, default rates were consistently under 10 percent, and usually under 5 percent,” he says. “I knew USA Funds had a system that would benefit Spartan College.” That system is USA Funds Borrower Connect™, a web-based software system that automates telephone, letter, and email communication with student borrowers. To provide a complete picture of each borrower, data can be uploaded from multiple servicer and U.S. Department of Education databases into USA Funds Borrower Connect by financial aid staff. Users can view real-time default rates, aggregate loan data from multiple providers for a single borrower, and generate reports on borrower information and outreach history. The tool’s easy-to-use dashboard provides a snapshot of the school’s borrowers and the status of their loans. Targeted communication strategies can be created to reach borrowers at different stages of repayment.
“USA Funds Borrower Connect makes it so easy to identify delinquent borrowers and immediately contact them to discuss deferring or setting up a repayment plan,” Riling says. Initially, some in the college’s administration were wary of bringing borrower contact in-house, Riling says. There was a fear the process would be too overwhelming for overworked staff who had to spend the majority of their time manually gathering information from the Department of Education. “There was a thought that third-party providers would better meet the needs of the institution,” he says. “However, I knew we needed to bring communication within the college and take ownership of our high default rates. USA Funds Borrower Connect was the tool that would allow us to do so easily.”
Spartan College successfully implemented USA Funds Borrower Connect in April 2013. “The support from USA Funds was great,” says Riling. “They did all the work necessary to get the system up and running. The first time my team logged in, all of the necessary information was there.” USA Funds also provided a web-based training class for Riling’s staff to ensure they could effectively use the default prevention software. “If we had any questions about the system, especially early on, someone from USA Funds would always respond within 24 hours,” Riling says.
USA Funds Borrower Connect enhances the effectiveness of an institution’s borrower outreach, according to Riling. The system saves campus staff time by automatically generating call lists and sending emails on behalf of the college. Riling’s staff can use that time to focus their efforts on making direct contact with students and helping them stay out of default or helping defaulted borrowers rehabilitate their loans.
“Since implementing USA Funds Borrower Connect, we have rehabilitated 13 students out of default,” says Riling. “This helps lower our school’s CDR.” Spartan College’s CDR has been dramatically decreasing since the implementation of USA Funds Borrower Connect, according to Riling. The 2011 CDR closed at 22.6 percent, and 2012 is projected to finish at 13.2 percent.
For more information about USA Funds Borrower Connect, visit www.usafunds.org/LTW