Report: “Protecting Colleges and Students: Community College Strategies to Prevent Default”
Organizations: The Association of Community College Trustees and the Institute for College Access & Success
Authors: Bryce McKibben, policy analyst, ACCT; Matthew La Rocque, research analyst, Ticas; Debbie Cochrane, research director, Ticas
Summary: The report is based on a study of nine community colleges representing different geographic locations, student-body sizes, and academic offerings. It examines predictors of loan default and strategies colleges use to prevent it. The report also includes policy recommendations.
Key findings:
- Completion matters: Across the colleges in the study, the default rate for completers was 9 percent, but it was 27 percent for noncompleters.
- Student characteristics are less conclusive: The gap between default rates for high-risk borrowers and others varied quite a bit from college to college.
- There is no one-size-fits-all default-management strategy for colleges.
Recommendations for colleges:
- Make default reduction a campuswide project.
- Analyze who borrows and who defaults.
- Counsel and inform borrowers when they need it.
- Participate in the federal student-loan program.
Policy recommendations:
- Make student-loan data more user friendly for colleges.
- Improve the process for appealing cohort default rates.
- Improve student-loan entrance and exit counseling.
- Improve loan servicing.
- Consider prorating student loans for part-time students.
- Automatically enroll severely delinquent borrowers in an income-based repayment plan.
- Use a student-default-risk index that incorporates the share of a college’s students who borrow for accountability purposes.
Bottom line: There is no silver bullet for preventing borrowers from defaulting, but there is still a lot colleges can do to foster successful loan repayment.