Definitive Guide to Student Loan Default Prevention

Look inside unique approaches to student success

Cookie-cutter default prevention tactics that treat every school and every student the same don’t work. What works is moving beyond standard outreach plans and engaging student loan borrowers based on their individual situations. Madison College is doing just that; driving positive outcomes using unique approaches to student loan default prevention and repayment support. They’re not only helping their greatest assets—students—succeed, they’re also giving those who’ve stopped out a second chance at success.

  To read more, download A Look Inside: A Multi-Channel Approach Lowers CDR [A Case Study].

Jump-start your default prevention provider search

If your school decided to hire a default prevention company, these six steps can help you jump-start your search and find the provider to meet your needs and deliver the results your desire.

  Get started and download 6 Steps to Choosing a Default Prevention Provider.

In general, you can use a Request for Proposal (RFP) to facilitate your search. Or maybe you simply pose questions through phone conversations. Either way, having clear goals helps you determine which solution is best. Knowing your requirements and identifying "nice-to-haves" are critical in helping to find the best option for you and your students.

 Download this handy Checklist to Compare Default Prevention Providers and find the best fit.

Default prevention pricing guidance

Just like there are multiple ways to engage and counsel student loan borrowers, there are multiple pricing models for default prevention services.

  Download Default Prevention Pricing Guide to compare the top methods and look at their pros and cons. 

Uncover an insider's guide to Cohort Default Rates

The U.S. government’s main metric for school accountability in keeping student loan borrowers out of default is the three-year Cohort Default Rate (CDR). A CDR is the percentage of a school's U.S. Federal Stafford loan borrowers (Direct/Federal Family Education Loan Program) who enter repayment during a federal fiscal year and default within the cohort default period. The monitoring period begins on October 1 of the fiscal year when the borrower enters repayment and ends on September 30 of the following two fiscal years.

 Download Insider’s Guide to Cohort Default Rate to learn more or to share information with your colleagues. 

Repayment rate: a new default metric

Although CDRs are the main metric for school accountability in keeping student loan borrowers out of default, the Repayment Rate is gaining in popularity. There’s no agreed-upon definition, but Repayment Rate generally means the percentage of borrowers within three years of entering repayment who:

1. Didn’t default on their loans; and,
2. Reduced the amount they owed on those loans by at least $1.

Repayment Rates are thought to be more sensitive, because CDR measures only the worst-case repayment scenario (default) and can be manipulated by allowable deferment and forbearance options. Whether or not Repayment Rates become a legislated standard, knowing that your students are reducing their principal balances is an important student success metric. For more information, check out Getting Repayment Rates Right.

Helping students understand repayment options

Federal student loan repayment plans are varied and numerous. Some, like the Standard and Extended Plans, are easy for students to enact with a call to their loan servicer. Others, like income-drive repayment (IDR) or consolidation, have a free borrower application process  through the U.S. Department of Education's Federal Student Aid. The applicant must provide information related to their demographics, finances, and federal student loans.

 Download these helpful resources to pass to your students to assist them in the journey of applying for their best suited repayment plan.