When financial aid offices are the only ones engaged in default prevention work, the entire process is limited and likely to have diminished results, according to NASFAA Assistant Director for Communications Justin Draeger at the Michigan Guaranty Agency's third Default Prevention Symposium. Draeger served as a guest speaker at the event along with Andrew Koch, director of student access, transition, and success at Purdue University and John Pierson from the Federal Student Aid default prevention team.

"For too long financial aid offices have been the sole owners of default prevention, and it ought not to be that way," said Draeger.

He explained that default prevention work is a dynamic process that has several interconnected parts that cannot, and should not, be tackled by the financial aid office alone. Focusing all available resources at only one of the underlying causes of default may also be counterproductive. He continued by outlining several corollary, underlying factors that are associated with student loan default.

• The more classes a student fails, the more likely he or she is to default
• The more credit hours students take, the less likely they are to default (up to a certain point)
• Students that work outside of school in part-time jobs are generally less likely to default (although excessive hours show a positive correlation with default)
• Students with higher GPAs are less likely to default
• Students who have positive feelings about their school experience, feel their school expectations were met, and feel that they got what they paid for in their education are less likely to default.

But the strongest corollary relationship with student loan default was tied to whether a student graduated or withdrew from school. Pierson pointed out that over 60 percent of all students who default did not complete their college educations. He argued that anything schools do to help students find academic success is in fact, a default prevention effort.

Draeger introduced a Successful Student Loan Repayment Model to illustrate activities that should take place throughout a student's academic career to reduce the likelihood of default. The model emphasizes a holistic approach to default prevention, demonstrating that the majority of default prevention activities may actually fall outside of the financial aid office's purview. Draeger acknowledged that getting "buy-in" from other departments on campus may be difficult if "successful student loan repayment" is the single most important goal. He offered a second version, the Student Success Model, which contained many of the same elements as the Loan Repayment Model, but had student success at its core.

"You can use this model, along with your school's mission statements, to get buy-in from the other departments on your campus," Draeger explained.

Koch emphasized the ties between student success and successful student loan repayment and went on describe several reasons that so many students drop out of school each year, especially during the first year. Koch spoke specifically about what schools can do to ensure a good institutional fit between schools and students and focused on social and academic integration, student engagement in learning, student commitment and motivation levels, and campus-wide involvement.

Research has shown that first-year integration and success programs can make a large difference in helping students complete their educations, and subsequently successfully pay back their student loans, according to Koch. Koch recommended more effort in creating programs that increase student retention and success by focusing on meeting students' needs through programs that build students' relationships with the school such as, learning communities, mentoring programs, and freshman success series.

Symposium participants received a Student Transition Timeline that identified specific "student success pressure points" based on what students might feel and experience at various points in their academic careers. Attendees divided into break-out groups to examine, brainstorm, and present ideas about possible programs that could be implemented during those pressure points that would positively affect students.

"Dynamic problems - like default prevention - require dynamic solutions," said Draeger after the break-out session. Draeger illustrated a dynamic solution recently taken by several colleges in the Midwest. These schools began offering programs specifically geared towards single mothers. Institutional research had revealed significant numbers of single mothers on their campuses and the struggles they experienced in trying to remain in school. The schools implemented programs to provide residence-hall housing for both mothers and children, support systems like parenting workshops and mentoring, and child-care service, generally through child-development programs on campus. These mothers must pay for this program, but the program has partnered with the financial aid office to help defray those costs.

"It is not a free ride for these women," said one of the school's deans of students in a New York Times article. "They leave here with debt. But they leave as a professional."

In short, these schools are assessing the needs of their students and then implementing cross-departmental programs to help them find success, graduate on-time, and ultimately successfully repay their loans.

"Now that's dynamic," concluded Draeger.

More information on the Michigan Guaranty Agency Default Aversion Symposium Series is available online. Handouts of the presentations, video feeds, and transcripts on this session are available on the MGA Web site.

Posted 05/01/07 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.