Over the past ten years, PTI has worked with hundreds of schools to develop software to support successful default management programs. Together, we’ve helped over a million borrowers navigate the early stages of student loan repayment, and we’ve seen almost everything. As a result, we have learned which best practices are most effective in helping students avoid default and lowering schools’ cohort default rates.
Take what we have learned through years of experience with effective default management programs, and apply it to your organization’s program today.
KEY 1: Start with good data.
Perhaps you’ve heard the expression “garbage in, garbage out?” In the default management world, this means you must make decisions based on the most current, most accurate data available. Ensure that you’re working with the most recent verified borrower contact information and as up-to-the-minute information on balances and payment history possible. If you don’t have access to industry benchmarks, get access. Finally, make sure you are receiving timely updates from NSLDS and servicers.
KEY 2: Build strong relationships with your student borrowers.
The relationship you’ve already established with your student borrowers is an important advantage of in-house default management programs. When you consistently position yourself as a familiar and reliable information resource, student borrowers are more likely to trust you. And when they trust you, borrowers are more likely to respond to your outreach efforts. Establish contact with them early, before there’s a problem, to equip them with relevant resources. If a problem arises, they will be more inclined to receive guidance from a recognized contact they know and trust.
KEY 3: Provide guidance and solutions to struggling borrowers.
People can’t know something they haven’t been taught. Borrowers who are struggling may not be aware of the options available to avoid default. You are in a unique position to teach them. Share information about payment plans, forbearance, deferment, and consolidation and equip borrowers to make the best choice for their situation.
KEY 4: Equip your student borrowers with financial literacy to help them stay out of trouble.
Schools are in the perfect position to impart life-changing literacy education to student borrowers. Provide them with step-by-step instructions on accessing all their account information and how to verify the details of who they owe, how much they owe, and payment terms. Spell out the potential consequences of default and help them understand their financial obligation. Teach them the importance of budgeting and good money management today so they avoid defaulting in the future.
KEY 5: Know how to identify potential problems in advance.
Use reliable data to identify common attributes within cohorts of student borrowers who default at your institution. Look for commonalities within GPA, attendance, separation reasons, and program of study. Learn how to recognize high-risk students so you can put systems in place to flag and follow up with them quickly if problems occur. If a flagged account exits school, you know and can reach out quickly.
KEY 6: Streamline your communication efforts.
Create a communication plan in advance and develop templates for standard communication pieces that will be delivered at key milestone events. Then be sure to track and measure your default management activities, so you’re confident you’re taking action at the right time and borrowers won’t fall through the cracks.
Cohort default management is complex, but help is available. PTI offers a range of options to help you reduce your organization’s CDR and relieve an overburdened in-house team.
Call (402) 899-8143 or email info@prioritytech.com for a free consultation or more information.