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"Three-year CDR Calculation and Programs to Enhance Student Success" was the focus of the Michigan financial aid community as they participated in the fifth installment of the Default Aversion Symposium Series that was held on Wednesday, October 28, 2009. MGA developed the symposium series after Federal Student Aid launched a statewide default prevention project to engage schools, lenders, and guarantors to develop or enhance default prevention activities. In conjunction with the Michigan Statewide Default Prevention Project that began in 2006 and the united goal that we all share in ensuring that Michigan students avoid loan default, this installment built on the fourth symposium's theme, "Financial Literacy and Student Success."

John Pierson, U.S. Department of Education, FSA Default Prevention, began the morning with a presentation entitled, "U.S. Department of Education Default Prevention Update." Mr. Pierson's listing of default prevention challenges included:

• Increasing Loan Default in a Changing Landscape
• The Recession
• All Direct Loan Environment
• The Golden Goose
• The Three-Year Calculation

He stated that the recession is, unfortunately, occurring concurrent with the change from a two-year to a three-year CDR calculation. This will create a transition period (FY09 and FY10). The Golden Goose is the Stafford loan portfolio where revenue will be harvested to pay for increases in the Pell Grant program. With regard to the three-year CDR calculation, Mr. Pierson mentioned that there are many things schools should do now to protect themselves and their student borrowers.

John Pierson Video Presentation Part I (Microsoft Producer File 27 minutes 26MB)

John Pierson Video Presentation Part II (Microsoft Producer File 39 minutes 43MB)

John Pierson PowerPoint Presentation

Angela Johnson, Assistant Dean, Student Affairs, Cuyahoga Community College, Ohio, discussed "Every Default Tells a Story: Look at Yesterday's Default to Increase Success of Today's Student." Ms. Johnson took the audience through a three-year default aversion project with the two-year school sector in the Ohio Association of Financial Aid Administrators (OASFAA). Through an analysis of previous loan defaults they identified common characteristics to determine who is defaulting and why. The analysis enabled schools to develop specific strategies to help students avoid default. It allowed the school to correct ineffective practices throughout the institution. It enabled the school to identify high-risk students and helped to identify the relationship between loan default and student success.

Student success strategies involved establishing a campus committee to develop student success categories: retention, intervention, and student success. It included establishing ownership in the program which involved the financial aid office, student affairs/enrollment management, and the transfer articulation area. This led to the development of a mentoring program for students in developmental Math and English courses and academic progress initiatives.

Ms. Johnson mentioned that only a few resources are needed to begin an analysis:

• Loan Record Detail Report
• Internal system to obtain demographic data
• Partnership with critical areas that impact success
• Support of your executive leadership team

To obtain additional resources and support she suggested working with your guarantor or the U.S. Department of Education.

Angela Johnson Video Presentation Part I Microsoft Producer File (34 minutes 35 seconds 24MB)

Angela Johnson Video Presentation Part II Microsoft Producer File (35 minutes 36 seconds 35MB)

Angela Johnson PowerPoint Presentation

A panel presentation by representatives of the various school sectors lead the afternoon session with many different ideas to try to lower default rates.

Becky Powell from Montcalm Community College presented the following ideas from the community college sector:

• Students are required to do new entrance counseling each academic year, even if they have done it in prior years.
• Students must request a loan on a separate loan request form. It is not automatically packaged in the Award Letter.
• The school receives a bad debt list monthly from their guarantor. Letters are sent with loan default pamphlets.

John Nickless from Albion College presented ideas from the private sector:

• Work with students on a one-on-one basis concerning their student loan.
• It is important that students know their lender(s).
• Exit counseling can be hands on, such as group sessions; Resident Assistants utilized to assist students; inform students yearly how much they have borrowed (especially high debt borrowers); and establish contact between borrower, school, and lender.

Vickie Crupper from the University of Michigan presented ideas from the four-year public sector:

• Notify students through email about their student loans.
• Train staff in making three-way calls between student and lender.
• Build a profile of borrowers and then tailor what approach should be used for financial literacy.
• Continue to work on customer service so students become loyal.
• Contact withdrawn students.

Diane Herroon from Michigan Institute of Aviation and Technology presented ideas from the proprietary sector:

• More one-on-one counseling with students about borrowing.
• Explain total debt prior to starting a one-to-three year program.
• Survey students about any concerns they might have, and establish a 24-hour turnaround time of contacting the student to solve the problem. This improves customer service.
• Hire an in-house default prevention manager to assist the students.