Prevent defaults and encourage debt management on campus

Financial aid professionals are in an ideal position to help at-risk borrowers understand the importance of repaying student loan and consumer debt. You can increase student retention and reduce student loan delinquency and default through a variety of techniques, including the following:

  • Set up an orientation session or course for new students, covering topics such as study skills, how to be a successful student, time management, and resources on campus
  • Require students on academic probation and re-entering students to complete a course which includes study skills and time management
  • Get financial aid and money management on the curriculum for classes that have a financial component - even if only for one hour each term
  • Utilize effective student loan counseling and consider requiring borrowers to complete an entrance interview for each new loan or each year
  • Hire a dedicated default prevention staff member: borrowers need personal contact
  • Provide debt management counseling to students (use Mapping Your Future's financial literacy counseling or money manage content to start)
  • Implement campus partnerships to identify and assist at-risk students
  • Provide a calendar to students exiting your school - after you've marked their repayment start date on it
  • Work with borrowers after they leave school (make phone calls or send letters/e-mail to borrowers who are in grace or who already are delinquent)
  • Allow students to keep their school e-mail addresses after the leave or graduate so you have an easy way to reach them to offer assistance
  • Monitor potential withdrawals and advise these students about their options
  • Review your portfolio to identify students at high risk for default (if resources are limited, focus efforts on at-risk students)
  • Start a peer counseling group on campus
  • Attend default aversion workshops when offered (ask your guaranty agency and lending partners for more information)
  • Develop resources and referral list for students with financial trouble (e.g., consumer credit counseling services, federal trade commission, etc.)
  • Adopt a financial literacy program that addresses debt management issues beyond student loans including budgeting, handling credit cards, and choosing insurance
  • Share your successes with your peers