October 14, 2020

How Colleges Are Reducing Default Rates

How Colleges Are Reducing Default Rates


A new brief re-examines what several colleges are doing to address student loan default, six years after the initial analysis of their programs.

The Association of Community College Trustees and the Institute for College Access and Success revisited Grossmont College in California, Guilford Technical Community College in North Carolina, Lane Community College in Oregon, Minneapolis Community and Technical College, Moraine Park Technical College in Wisconsin, and Valencia College in Florida. The organizations first looked at what efforts these colleges were making to reduce default in a 2014 brief.

About 1.2 million borrowers defaulted on their student loans last year, according to the new brief. The federal government measures how many students default at a given institution with the cohort default rate. If too many former students default, colleges can face sanctions.

“Colleges’ actions can and do meaningfully reduce their students’ risk of default,” Lindsay Ahlman, associate director of research and knowledge management at TICAS, said in a news release. “With the COVID-19 pandemic threatening the financial security of millions of students, it’s imperative that colleges act now to set their students up for repayment success.”

One example of successful interventions is Guilford Technical Community College. Its cohort default rate hit 29.7 percent in 2011, just below the 30 percent threshold that triggers federal sanctions. Its 2017 CDR was just below 12 percent.

The college has created a campuswide default-aversion committee to bring the issue to every department’s attention. The college is also using federal administrative data and its own records to identify programs where students could benefit from more aid or financial literacy information.



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