Colleges and universities are navigating a complex landscape—grappling with enrollment declines, rising operational costs, waning public support, and growing scrutiny. On top of these pressures, institutions are being called to do more to support former students in avoiding federal student loan delinquency and default.
To meet this challenge, schools need a clear strategy to manage cohort default rates (CDRs). While a high CDR can jeopardize access to federal aid, improving it is also a powerful way to demonstrate commitment to student success. Even with limited staff, targeted efforts can make a meaningful impact. Here are some key strategies to help reduce your institution’s CDR.
Student Borrowing Awareness
- Provide mandatory financial wellness education, (e.g., entrance counseling, workshops on budgeting, credit, loan repayment, and debt management) or a personal finance course.
- Ensure the availability of in-depth, personalized exit counseling to help students understand their loan servicer information, repayment schedule, and options.
- Limit overborrowing by:
- Counseling students to only borrow what they need and by issuing an annual indebtedness letter.
- Setting institutional loan limits below the federal maximums where appropriate.
- Promoting scholarships, grants, and work-study programs.
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Repayment Support
- Contact borrowers with early and ongoing engagement, before and after graduation, especially during the 6-month grace period. Provide clear, simple guides on repayment options, including Income-Driven Repayment (IDR), Public Service Loan Forgiveness (PSLF), deferment, and forbearance.
- Set up automated reminders (email/SMS) about repayment start dates and options.
- Partner with a default prevention management service or use internal staff to contact at-risk borrowers.
Data and Analytics Strategies
- Identify and monitor borrowers at-risk of default using predictive analytics (e.g., low GPA, non-completion, high debt-to-income ratio).
- Target these students and perform intensive support and follow-up.
- Coordinate with loan servicers to track your former students’ activity to ensure timely communication, and request regular reports on borrower status, delinquency, and outreach efforts.
Institutional Enhancements
- Offer strong academic advising, tutoring, and support services to improve retention and graduation rates. Students who complete their programs are much less likely to default.
- Strengthen career services to help students find employment quickly after graduation through job placement services, resume/interview preparation, and employer partnerships. A stable income helps graduates stay on top of their loan payments.
Administrative Improvements
- Establish a default prevention task force including representatives from financial aid, academic affairs, student services, and institutional research. Meet regularly to assess progress and implement new initiatives.
- Regularly review and analyze your Loan Record Detail Reports (LRDR) for errors and trends. Then, work with loan servicers to promptly correct any discrepancies. If you’re short-staffed and need assistance in this type of analysis, find a tool (like Cohort Analyzer) that does all the heavy lifting for you.
Third-Party Solution Partners
- Consider using outside services to provide skip-tracing, data-driven outreach (from grace through default), education, counseling, and data analytics to deliver targeted outreach and personalized support.
- An inbound helpline can provide borrowers with experts to share information over the phone, by email, and through chat. It lets former students get the help they need, when they need it, and in a manner that they prefer to get it.
While adding additional strategies to an already packed to-do list may seem daunting, you don’t have to do it alone — Ascendium’s student loan repayment support services can relieve some of the pressure. Between our financial wellness resources and student loan counseling services, we have schools covered and can help make a very positive impact for your former students’ repayment success.
