Tips To Manage Student Loan Defaults

"Cohort default rates are on the rise for many colleges and universities," Community College Daily reports

"The reasons are numerous — changes in the cohort calculation formula, the current economic climate, and low student program or degree completion.

Newspaper headlines suggest that cohort default rates are increasing because students borrow too much. While high debt burdens are troublesome for students, the data at the community college level tells a different story.

The single biggest risk factor for community college students is program completion. A defaulted loan borrower at a community college is likely to have a loan balance somewhere between $3,500 and $4,000. In many cases, the student obtains a freshman-loan but does not complete his or her program of study. College administrators should consider attacking the issue on two fronts — students currently enrolled and students in active loan repayment status. ...

A literature review published in the National Association of Student Financial Aid Administrators’ Journal of Student Financial Aid stated, 'The majority of the research we reviewed suggested that completing a postsecondary program is the strongest single predictor of not defaulting regardless of institution type.' Institutional investments in retention can reduce the likelihood of default for students currently enrolled, but colleges must also focus on the needs of those students currently in repayment."

NASFAA's "Financial Aid in the News" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.