Creating a default prevention plan can be a tremendous undertaking. But having an effective default prevention plan in place is necessary to lower student loan delinquencies and defaults.
To accomplish your institution's default prevention goals:
Step 1. Establish your default prevention goal.
- What is your student loan delinquency rate (from your school's default aversion roster)?
- What is your school's cohort default rate (from the U.S. Department of Education)?
- What would you like these rates to be?
Step 2. Identify your "typical" defaulter.
- Can you determine who these students are from your historical data?
- Do these students typically withdraw? Do the students who withdraw share some other common trait? For example, do they all have the same major? Are they 1st-year students? Are they mostly independent or dependent students?
- Do they have high loan balances?
- Are the students not making satisfactory academic progress?
Step 3. Assess the resources you have available.
- How many hours each week can your college staff dedicate to default prevention? Default prevention is a campus-wide issue that may affect academic areas, housing, business staff, and others.
- Do you have staff available to do calling campaigns?
- What steps or communications do you currently have in place that could assist you in reaching your default prevention goals?
Step 4. Determine the audience you want to target with your borrower counseling approach.
Many schools have found success in managing default prevention by addressing student accounts by:
- Cohort year
- Days delinquent
- Valid phone numbers and addresses
Help Is Available
Download our free Delinquent Borrower Counseling Guide (PDF).
This detailed resource walks you through the necessary steps to define and implement an effective default prevention plan. There are sample call scripts and scenarios, as well as situational decision trees, which allow you to explore the best options available for dealing with your delinquent student loan borrowers.