Our School has exit intereviews that include a DVD on how to take care of Loans, the prospective students that come into our campus that are in default have told us they were never told at previous schools how to take care of loans if they could not pay them at the time of notice !!
Reviewing a student's total debt is very important. Have you come across a student that had a huge amount of existing debt that once you advised them of what their obligations would be after adding student loans then decided to cancel their enrollment? (sorry - I'm pretty sure that's a run-on sentence!) :) If so, how did your management/admissions team react to the cancellation?
I agree with many of the points here, especially making students prove the need for borrowing above tuition costs.
I also believe that once a student is delinquent on their debt it is human nature to avoid dealing with it. It is important for the student to understand that the loan programs do offer deferment and forbearance options for them and they do not need to hide. There are so many repayment options available to them that there is really for few good excuses for defaulting. We need to be sure to have done everything we can in building a supportive relationship with our students so that they do not avoid us at such a crucial time.
i think the most important thing we cna do to prevent student from defaulting on student loans is give all of the correct information up front. letting students know loan payment amounts and length compared to average starting wages helps them budget.
Michael,
You raise many good points. Many outcome related issues such as default rates and graduation rates can often be corrected by a more selective admissions process.
John Ware
Loan counseling with each student prior to a student accepting student loans to help them fund their education. This a most important best practice at our school. Students need to understand their responsibilities with repayment after graduation and consequences if they do not.
I agree! Just because a student qualifies for a loan doesn't mean they should take it. It's very tempting to use that money for items that have no bearing on the student's education...yet it still has to be paid back.
One way to try to prevent default is to speak with students one-on-one about the process they are going through. WHen a student applies to school, they are filling out tons of paperwork b/w admissions and FA. After going through the entrance couseling, there should be a review meeting where important parts of the process are focused on. Reviewing the emrollment agreement again, talking about the loan counseling meeting, discussing disclosure forms. It is important that once everything is signed and students are started in school, that they have a specific contact who they trust where they can go to get their questions answered, or have that person lead them in the right direction.
From what I have seen with Students. They think about today and not tomorrow. Some of them come to school and the first thing out of their mouths is when do you give overage checks. They have something come up to where they need money and this is the quick fix. These are the one's that have no intentions of paying back loans and don't have the committment of changing their lives. Schools need to use tough questions in the interview process and weed out the one's here for money and focus on the one's committed. We should let them know that we budget to cost and see how fast the one's here for money leaves and goes to another school. In our School, the days of 100 enrollments for a Rep. in a quarter are done and now we have about 20 but they are committed Students and it has effected Retention and Graduation percentages and the Job Placement percentage has went up.
I actually went to a school that was regionally accrediated and they budgeted Students to cost. If you needed a computer or something else that was a school related expense, You had to prove the need then they would up your loans for a certain amount just for that one semester/quarter.
Michael,
I agree with your point in regards to loans for living expenses, however, schools have limited flexibility to deny students access to federal student loans.
John Ware
I think one of the main things is to make sure that before the student commits to the loan is to make sure they understand the ramifications of defaulting. The school should also make sure that the program they are entering has the potential to find employment that will allow them to payback the money. The school should make sure that the student is committed to this particular course of study and will have a strong likelyhood of completing that course of study.
Share default rates of students currently and provide ideas to mitigate becoming default on loans. The key is educations and communication.
We have found that retention places a huge part in student loan repayment. Our staff and instructors work closely with those students we "identify" as risks, and we do what we can to help them through whatever problems they may be having. This is in addition to the required couseling that all students receive. If they graduate...they rarely default.
I think explaining everything to the student up front is key. We have an excellent financial aid department that assists students with this process.
I think that Students should only be packaged to cost. They don't think about having to pay back that excess money later, they are just thinking of the quick fix now. When Students graduate and owe $40,000 in loans for a Associate degree, they dont comprehend that they maxed their loans out and received a overage check each quarter and now their loan debt is huge. I say package to cost.
Our Institution has started paying students at risk for student loan default. They come to campus on their weekends and cook for homeless (we are a Culinary institution). They are paid significantly for their work and this money goes towards their student loans to prevent those at risk of going into default.
Make sure that the student understands the financial debt that they will be incurring prior to signing any financial aid papers. Prior to graduation the students should meet with student services for assistance on loan consolidation.
Our institution has found that reviewing in detail all financial obligations and loans with the student and family are important to the long-term success of repayment. We meet with many students who have attended college previously and have no idea how they previously paid for college.
We make sure before they start our college they know how they are paying for school - are they using grants, loans, what type of loans, how much in loans, terms of loans, etc. When a student is aware of their investment, they tend to want to succeed and push for graduation; and students who graduate tend to make payments on their loans. It is a winning cycle.
Veronica,
This is a very good point!
Kimberly Stein
