fall conference| nov. 2012 david hammond and cynthia battle u.s. department of education angela k....
TRANSCRIPT
Fall Conference| Nov. 2012
David Hammond and Cynthia Battle
U.S. Department of Education
Angela K. JohnsonCuyahoga Community College
Developing Effective Mandatory and Voluntary Default Management Plans
Session 12
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In This SessionPart 1: Developing a Default Prevention Team
Part 2: Identifying Default Risk
Part 3: Default Prevention Plans
Part 4: Resources – FSA and Federal Servicers
Part 5: A Case Study Cuyahoga Community College
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The Changing Landscape
• Loan default increasing for most schools• Educational costs continue to rise• More students borrowing more money • The combination of Stafford and private loans
equal greater debt • Changes to CDR calculation accompanied by new
sanctions and an enhanced benefit
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The 3-Year CDR Calculation
• Expands the default tracking window from 2 years to 3 years
• Creates a transition period (FY09/10/11)
• Raises penalty threshold from 25% to 30%• New set of requirements for FY09, FY10...• Possible compliance issue beginning in September 2014 (FY 2011 CDR)
• Increases availability of “disbursement relief” from 10% to 15% (effective 10/01/11)
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Mandatory Plans - 34 CFR 668.217
New cohort default rate regulation requires that schools which achieve a cohort default
rate equal to or greater than 30% must develop a default prevention plan.
Requires identifying at-risk borrowers
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3-Year CDR Corrective Actions• First year at 30% or more
• Default prevention plan and task force• Submit plan to FSA for review
• Second consecutive year at 30% or more– Review/revise default prevention plan
– Submit revised plan to FSA
– FSA may require additional steps to promote student loan repayment
• Third consecutive year at 30% or more• Loss of eligibility: Pell, ACG/SMART, FFEL/DL• School has appeal rights
Default Management
Organize a Default Prevention Task Force
Assess resources for teamIdentify members Set Purpose Detail Responsibility
Organize a Default Prevention Task Force
Assess resources for teamIdentify members Set Purpose Detail Responsibility
Set Objectives:Establish ObjectivesIdentify steps needed to achieve goal
Define and Identify Risk Determine who is defaulting and why Analyze data
Define and Identify Risk Determine who is defaulting and why Analyze data
Outline Actions Specify actions needed to achieve your goalEnsure actions are measureable
Submit Plan FSA’s Default Prevention Team to assist schools with:
Establishing their default prevention goals
Developing, refining and reviewing your default prevention plan.
Submit Plan FSA’s Default Prevention Team to assist schools with:
Establishing their default prevention goals
Developing, refining and reviewing your default prevention plan.
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Organize a Default Prevention Task Force
The Default Prevention Task Force will drive your default prevention process:
Assess the resources you have available
Team participants SHOULD be across campus
Identify the purpose of the task force
Detail responsibilities of determining risk
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Default Prevention Task Force A group of specialists who will ultimately conduct data
analysis to determine the reasons for default at your school and formulate a set of intervention strategies
Select a leader for the group (Best if not FAD); Separate Default Coordinator is recommended
Use your current resources to create effective, customized default prevention programs that compliment existing efforts
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Activities for the Team
Study your student population. Identify any common characteristics of your defaulters and non-defaults, and borrowers and non-borrowers
Build on Early Intervention strategies already in existence
Discuss your current strategies and determine what works and what may need some improvement
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Activities for the Team (cont.) Work closely with your servicers and lenders
Find out what type of services are available from your servicers/lenders
Fine-tune your Loan Servicing procedures for the period while the borrower is at your school
Have clear and precise procedures with a timeline of dates to take appropriate actions
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Activities for the Team (cont.)
Fine-tune your servicing efforts during the grace period and repayment
Have clear and precise procedures with a timeline of dates to take appropriate actions
Review all of your borrower education materials
Make sure all of your materials are current and up-to-date. Look for new materials to incorporate into your training
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Activities for the Team (cont.)
Review your results and make the necessary enhancements
Always look for ways to improve whatever you are doing. Use evaluations or surveys to get input from the students and staff
Create a default prevention plan!
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Part 2
Identifying Default Risk
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Understand Who is Defaulting… and Why
After establishing a default prevention team:
Step 1 - Conduct analysis to identify the sources of default risk
Step 2 - Create measureable interventions/steps
Step 3 - Describe consequent actions to be taken to reduce default (the written plan)
Step 4 - Review and revise as necessary
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Steps to Identify Default Risk
The job of your Default Prevention team:
determine the source of your default risk; determine what steps your school will take to
reduce default risk; represent all parts of the institution (including
management), which will contribute to risk reduction activities;
allocate school resources to default reduction activities;
assess the effectiveness of default reduction activities over time: are they working?
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Steps to Identify Default Risk Conduct Risk Analysis First!
Understanding who is defaulting, and why Increase effectiveness of DP efforts Reduce wasted time/resources Aiming at the right targets You will need data Similar to studies necessary to understand/improve
retention/graduation Review combines NSLDS, servicer (default and
delinquency) data, and school data about defaulters and non-defaulters
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Steps to Identify Default Risk
Conduct Risk Analysis First
Use data to create a picture of borrowers at-risk of default
‘Who’ is not enough
‘Why’ will require input of academic, student affairs, and other professionals
Knowing ‘why’ is necessary to create targeted, useful and measureable interventions
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Reducing Default RiskInterventions
Risk Analysis Results for
Average School
Poor… Educational Outcomes
Employment Outcomes
Repayment Outcomes
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Examples: “Who”
• Never Contacted • Developmental Studies• Late Admits• Early Withdrawal• Gradated/Not Pass
License Exam• No Exit Counseling
• Excessive Debt• Academic Preparedness• Academic Probation• No Job in Profession• Certain Majors• Attendance Issues• Student Employment• Late Majors
Your ‘who’ will be unique
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Examples: “Why”
• Finances/Need • Relationship Issues• Physical & mental
health challenges• Dependent-care• Transportation • Housing
• Poor study habits• Basic skill deficits• Language barriers• Feel unwelcome, no “campus connection”• First generation: No role
models or family support• Transition difficulties
Understanding ‘why’ is necessary
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Part 3
Developing a Default Prevention Plan
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Developing the Plan
Things to Consider When Creating Your Plan
Analyzing Default Loan Data to Identify Default Characteristics
Early Stages of Enrollment
Entrance Counseling
Financial Literacy for Borrowers
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Developing the Plan (cont.)
Things to Consider When Creating Your Plan
Early Identification and Counseling for Students at Risk
Communication across the Campus
Default Prevention and Retention Staff
Late Stages of Enrollment
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Developing the Plan (cont.)
Things to Consider When Creating Your Plan
Exit Counseling
Withdrawals from School
Timely and Accurate Enrollment Reporting
After Student Leaves School
Developing the Plan (cont.)
Things to Consider When Creating Your Plan
Early Stage Delinquency Intervention
Late Stage Delinquency Intervention
Enhanced Entrance and Exit Counseling
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Reducing Default RiskInterventions
Default Prevention Team translates ‘who’ and ‘why’ into core strategies to reduce default risk
Improve Repayment Outcomes
Improve Educational and Employment Outcomes
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Reducing Default RiskInterventions
Improve Repayment Outcomes
Examples of tactics:• Enhanced Entrance and Exit Counseling• Financial Literacy Education• Collect More Useful Contact Information• Early Stage (Repayment) Assistance• Late Stage (Repayment) Assistance
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Reducing Default RiskDP Plans
Plans we have reviewed recently
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Reducing Default RiskInterventions
Improve educational/employment outcomes
Examples of tactics:• Increase student success
‘Crisis’ response, program completion
• Reduce Program Completion Time
• Strengthen Relationship with Potential Employers
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Reducing Default Risk Developing a DP Plan
• Core efforts should be targeted at ‘who’ and ‘why’
• Your efforts may or may not utilize ‘best practices’. They may be unique to your particular problems
• Add general best practices only after you have established targeted activities
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Reducing Default Risk Targeted Efforts: When?
In school, In grace, In repayment
When: How to Intervene Driven by Data
Key to effectiveness of your plan -
Understanding how to utilize these opportunities
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Reducing Default RiskTargeted Efforts: When
Use ‘leverage points’ to gain active borrower participation:
• Admissions• Entrance and Exit Counseling• Probation/SAP• Registration
What ‘leverage points’ do you have?
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Reducing Default RiskActive vs. Passive Interventions• Passive: No action required…
• Loan Counseling• Financial Literacy Video
• Active: Borrower must do something which addresses identified risk:• Test re: R&R - results show ‘mastery’• Periodic update of contact information• Establish online account w/servicer
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• Analysis of Default Risk• Tracking and Projections• Additional Loan Counseling • Existing Student
Success Efforts for At-Risk Borrowers • Collect/Refresh Detailed Contact Information• Establish Online Servicer Accounts
Examples: DP Best Practices
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• Early Stage Delinquency Assistance• Late Stage Delinquency Assistance• Promoting Loan Rehab for Defaulters• Financial Literacy Training• Leveraging Loan Servicer Products and
Services • Review Policies/Procedures • Working with Employers
Examples: DP Best Practices
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Analyzing for default risk is THE
best practice!
Do the leg-work first! Let your data lead the way. That’s the surest way to end up with an effective
default prevention plan. Failing to take the time to understand who is defaulting, and
why, may be fatal.
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Part 4
Resources – FSA and Federal Servicers
We are here to HELP!
Goals of our Default Prevention Team Our Default Prevention Team was established to
assist schools with: Establishing their default prevention goals
Assessing the resources schools have available in order to establish their Default Prevention team
Understanding default risk through the use of servicer and NSLDS available reports and tools
Developing/refining your default prevention plan
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Need Assistance?
If schools need assistance in developing or reviewing their default prevention plan, please
send a request to the following e-mail address:
Contact Us!
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Provide outbound targeted calling campaigns along with inbound call center representatives to help borrowers become current
Utilize electronic communication methods, such as e-mail, to keep borrowers informed about account status
Work with schools to obtain current available contact information - Utilize a variety of tools to get the most current data to contact borrowers (skip tracing on delinquent accounts)
Work in partnership with the school community to assist borrowers in the later states of delinquency
Federal Loan Servicers
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Partnering with Schools:
All servicers work to gather feedback and findways to partner with schools on defaultPrevention
• Face to face meeting on school campuses• Financial aid conference attendance • Presentations at conferences• Proactive phone calls• E-mail communication
Partner with the servicers!
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Reminder: Protect the Grace Period
- Schools must learn when a borrower leaves campus to promptly report to NSLDS
Of the borrowers who defaulted, most did
not receive their full 6-month grace period
due to late or inaccurate enrollment
notification by the school.
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Reporting Resources:
Centralized Loan Information
NSLDS:
Includes Guaranty Agency (GA) or Lender held FFEL, PUT (ED-held FFEL), Direct Loans, and servicer assignments
Leverage NSLDS Reports for Default/Delinquency Prevention: School Portfolio Report
Delinquent Borrower Report
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Reporting Resources:
Individual Servicer Reports
Provide greater level of detail
Offer customization options
Include only loans serviced by that organization
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Part 5Cuyahoga Community CollegeA Case Study…
…illustrating the importance of understanding who is defaulting, and why, and how to apply this knowledge to reduce default risk.
Cuyahoga Community College
Cleveland, Ohio
Angela K. JohnsonExecutive DirectorEnrollment Operations
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Cuyahoga Community College Facts
• Largest community college in the state of Ohio• Serves more than 55,000 credit and non-credit
students annually• 32,000 plus credit students (district-wide)
• Multi-campus institution in Cleveland and surrounding suburbs
• Four campuses, one Corporate College location, one District Office and growing
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Who are our students?
• 60% students place into developmental English• 82% students place into developmental Math• 25% students received GED or passed ATB • 70% first generation college students• 55% receive financial aid
• 80% of Pell recipients have Zero EFC
• 62% are women• 60% are part-time students• 67% retention Spring to Fall/ 50% retention Fall to Fall
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• Rising education costs
• Decreasing state funding
• Struggling economy (state-wide and national)
• Lack of financial literacy education
• Reduced state funding
– Elimination of state grants for low cost institutions (all community colleges)
– State share of instruction (SSI) formula change
• Increased unemployment rate
Ohio’s Climate Concerns
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Overview of Defaulter Analysis
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• Identifying common characteristics of student loan defaulters to determine who’s defaulting and why
Defaulter Analysis – A Look at Yesterday’s Defaults
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Benefits of Defaulter Analysis
• Enables you to develop specific strategies to help students avoid default
• Allows you to correct ineffective practices throughout your institution
• Enables you to identify high risk students• Helps you to identify the relationship between loan
default and student success
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Loan Default Correlation to Student Success
• Hypothesis – Students who are more successful are more likely to complete their program and graduate. Thus, successful students have greater ability (economically) to repay student loan debt
Student success
Successful repayment
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• College preparedness• Success rates (passed courses)• Retention rates (term to term)• Matriculation rates (year to year)• Graduation rates (average)• Employment market for non-graduates• Knowledge about student loan borrowing
Student Success Assumptions
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• Project overview– In 2006, reviewed and analyzed shared data
sets and demographic information about student loan defaulters for three cohort years (2002, 2003, and 2004)
– Obtained data points either locally (institution) and from the Ohio Board of Regents
Default Aversion Project
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Non-Traditional Default Aversion Approach
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• Campus committee– Develop student success categories
• Retention, Intervention, and Student Success– Stakeholders
• Enrollment Management• Student Affairs • Student Success• Financial Aid• Academic Advising• Articulation & Transfer
Student Success Strategies
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Philosophical Focus
• Understand institutional factors that impede student success (social, environmental, etc.)• Address student access and success barriers
• Implement strategies that maintain success in support services for effective matriculation and completion
• Expand default aversion initiatives beyond the Student Financial Aid Office
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Common Data Points
• First time student (Y/N)• Transferred in (Y/N)• Average GPA • Hours completed• Graduated (Y/N)• Number of terms
completed• Program of study• Major course of study
• High school attended• Developmental
education course (Y/N)• HS diploma/GED/ATB
(Y/N)• First generation (Y/N)• Academic Progress
(Y/N)• EFC (by range)
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Defaulters (over 3 CDR periods – FY 02, FY03, FY04)
– 30% students placed in developmental education– 30% students received GED or passed ATB– 60% students had earned zero hours
• Average credits earned = 33.8 – 82% students had below 2.0 GPA
• Average cumulative GPA = 1.96– 38% students had not maintained SAP
• Disqualified or Warning
Cuyahoga Community College Data Findings
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Defaulters (over 3 CDR periods – FY 02, FY03, FY04)
– 60% are in 20-29 age group • 36% - age 20-24; 24% - age 24-29
– 69% - African-American / 29% - White– 53% students are male– 67% students are first generation college students– 50% students had an EFC = O– 5% graduated from Cuyahoga
Cuyahoga Community College Data Findings
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Default Aversion = Student Success
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• Mentoring Program– Developmental Math and English courses
• Students testing into Dev Ed Math 0950 and English 0990 mentoring program with On Course delivery and focus
• Learned from Achieving the Dream data• Gatekeeper courses where students struggle most;
Repeat courses more than once
• Satisfactory Academic Progress (SAP)– Terminate financial aid for all graduates
• Appeal for additional aid, proof of new degree sought regardless of credits completed
Student Success
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• Return to Title IV Withdrawals – Exit information and deferment
• Promote re-enrollment, personalized letter of next term info, and provide support services info
• Transfer Students– Add additional entrance counseling and
consultation session for new transfer borrowers– Mandatory academic advising and degree
completion planning for transfer students– Offer career counseling with degree planning– Transfer student orientation
Retention
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• Financial responsibility– Incorporated financial literacy in financial advising– Added financial literacy into First-Year Experience
courses• Implemented model for early/late stage delinquency
– Loan advising for students who have exited and reconnect them with college, enrollment, and loan repayment options
• Combined academic and financial aid planning– Developed individual student success plans based on
academic program to help students plan student loan borrowing
Intervention
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Cuyahoga Project Status• Successes
– Mentoring data• Increased retention up to 24% with students in cohort• Increased course pass rate 10%-12% with focused intervention
• Challenges– Continuity
• Keep the conversation visible within executive leadership
• Find the right marriage (with other projects/initiatives) • Opportunities
– Accelerate time to degree completion– Impact the system (academic/service) for all students,
not just financial aid students
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Student Success
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Contact Information
Angela K. JohnsonCuyahoga Community College
Phone: 216-987-4213E-mail: [email protected]
Questions
Thank You!Please let us know feedback or
further questions
Cindy Battle [email protected]
David Hammond David. [email protected]
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