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# **National Default Prevention Day (NDPD) 2002**

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####### Goals

Economic indicators point to an increase in student loan defaults. In
order to preserve program integrity and accountability, it is a goal of
the Secretary of Education and Federal Student Aid (FSA) to maintain a
National Cohort Default Rate (CDR) below eight percent.

In partnership with schools and the lending community, FSA sponsored
NDPD 2002. Events were held concurrently in twelve locations, in each of
our ten regional office cities, Washington, D.C., and Puerto Rico.
Building on the success of NDPD 2001, this one-day conference offered a
broad program of best practices and creative ideas in default
prevention. With a total of 1,975 registrants and actual attendance of
1,575, an increase of more than twenty-six percent was realized.

# **The Committee**

Jo-Ann Craig Rutgers University-NASFAA

Connie Kent National Student Loan Program-NCHELP

Bill Kohl National Student Loan Program-NCHELP

Ann Maria Fusco FSA - Financial Partners Channel

# Ben Leborys FSA - Students Channel

Clarence Hicks FSA - Schools Channel

# Ralph LoBosco FSA - Schools Channel

Maureen Nixon FSA - Schools Channel

Ron Selepak FSA - Schools Channel

Mark Walsh FSA - Schools Channel

# **An Invitation Strategy**

Although the entire financial aid community was invited to participate,
the Committee determined a need to concentrate on those schools with
Cohort Default Rates (CDRs) that exceeded specific measures outlined in
FSA's Strategic Plan. The Committee also elected to focus special
attention on those schools that exceeded the national average of 5.6
percent, while maintaining a loan volume in excess of ten million
dollars.

Consistent with this strategy, a general letter was sent to all schools
that participate in a loan program. In addition, a second invitation
letter was sent to:

-   All schools new to Title IV participation within the past year (63)

-   All schools with Perkins default rates greater than 50 percent (42)

-   All schools with CDRs greater than 8 percent (1478)

-   All schools with CDRs greater than 5.6 percent and a loan volume
    that exceeds \$10 million (98)

In addition to this correspondence, an email reminder regarding NDPD
2002 was sent to each Financial Aid Officer.

The following graphs indicate that this strategy was a success in that
there were a significant number of attendees from each of the special
invitation groups, and that the breakdown of the attendees was
representative of the school universe.

+-----------------------------+------------+------------+--------------+
| #                           |            |            |              |
|                             |            |            |              |
| # *                         |            |            |              |
| *Special Invitation Group** |            |            |              |
|                             |            |            |              |
| #                           |            |            |              |
|                             |            |            |              |
| #                           |            |            |              |
+-----------------------------+------------+------------+--------------+
| **List Description**        | **Original | **On List  | **Attendees  |
|                             | List       | and        | as Percent   |
|                             | OPEID#     | Attended   | of Original  |
|                             | Count**    | NDPD**     | List**       |
+-----------------------------+------------+------------+--------------+
| 1\. Schools new to title IV | 63         | 13         | 20.6%        |
| participation.              |            |            |              |
+-----------------------------+------------+------------+--------------+
| 2\. Most recent default     | 42         | 17         | 40.5%        |
| rate equals or exceeds 8%   |            |            |              |
| and has a Perkins Loan      |            |            |              |
| default rate that is in     |            |            |              |
| excess of 50% for the past  |            |            |              |
| three years                 |            |            |              |
+-----------------------------+------------+------------+--------------+
| 3\. Most recent default     | 1478       | 349        | 23.6%        |
| rate equals or exceeds 8%   |            |            |              |
+-----------------------------+------------+------------+--------------+
| 4\. Most recent loan        | 98         | 38         | 38.8%        |
| funding is greater than 10  |            |            |              |
| million dollars and the     |            |            |              |
| latest default rate exceeds |            |            |              |
| the national average of     |            |            |              |
| 5.6%                        |            |            |              |
+-----------------------------+------------+------------+--------------+

![](media/image3.wmf)

![](media/image4.wmf)

##### TOOL KIT

In addition to copies of all presentations, participant materials this
year included a "Tool Kit" designed to assist schools with default
management activities on their campuses. An important feature of the
Tool Kit was an Individual School Report developed by the Default
Management Staff of FSA. The report provided each school representative
with a snapshot view of their school's CDR, as well as a comparison with
schools of similar size and type within their state and region. It also
provided a graph demonstrating how a reduction of a specified number of
defaulters could positively impact the overall CDR of the school.

A software application that was developed by the Philadelphia Direct
Loan School Relations Office staff was also included in the Tool Kit.
The application is designed to assist schools with default prevention by
allowing them to download National Student Loan Data System data files
and sort defaulters and borrowers. In addition to the individual school
report and software application, NDPD participants were provided with a
list of various web sites that are geared to default prevention, a
default management checklist, credit management literature, and other
materials.

# **Evaluations**

The evaluation results spelled out how well NDPD met the participants'
needs. An overwhelming majority of respondents (85%) rated the overall
conference as either a 4 or a 5 on a scale of 1 to 5.

![](media/image5.wmf)

1 the lowest, 5 the highest

NDPD Survey Questions

1.  How well did this workshop meet your needs/expectations?

2.  How well did our announcements describe this workshop?

3.  Our goal is to provide accurate, clear and organized materials. How
    would you rate our materials?

4.  Please rate the presentation and/or slide shows for clarity and
    accuracy.

# **Summary**

The unifying theme of NDPD 2002 was Awareness\... how the school, the
guarantor, the lender, and ED each have a vital role to play. NDPD 2002
was very successful for a variety of reasons:

-   All NDPD 2002 sessions were well attended.

-   The attendees correlated with our intended audience, representing
    all three categories of institutions: Public, Private Non-Profit,
    and Proprietary.

-   Successful strategies of early awareness, prevention, and teamwork
    to reduce defaults were emphasized.

-   The Tool Kit provided schools with practical new tools to support
    their default management efforts.

# **Recommendations of the NDPD Planning Team**

-   The Individual School Report can be such a powerful tool for an
    Institution. FSA should consider making it available through a
    download from IFAP or provide it with the notification of an
    Institutions' official CDR.

-   Because the Official Cohort Default Rates are published each
    September, build on the success of NDPD 2001 and NDPD 2002 by
    declaring each September National Default Prevention Month, and hold
    NDPD during that month. The attendance for NDPD 2001 and 2002
    exceeded 2,500, which underscores the financial aid community\'s
    desire that this become an annual event.

-   Consider a type of Amnesty Program for any defaulted borrower that
    brings his/her loan into a current status during National Default
    Prevention Month. The Amnesty may be a forgiveness of interest
    and/or interest penalties or other incentives that might be used to
    encourage defaulters to bring loans into a current status.

# **Quotes from Attendees**

The following are representative the comments given by the participants
at NDPD 2002:

![](media/image6.png){width="3.7465277777777777in"
height="2.8097222222222222in"}

"Great workshop -- enjoyed the school perspective."

![](media/image7.png){width="3.251388888888889in"
height="2.438888888888889in"}

"It was terrific to get the broad scope of so many different approaches.
I will implement a couple of specific ideas, such as a more proactive
late stage delinquency program this year."

"Incredibly informative, interesting and fascinating! I'm anxious to go
back with these new and fresh ideas."

**The following organizations provided refreshment breaks.**

Region I: American Student Assistance

National Asset Management

Region II: New Jersey Higher Education Student Assistance

Raytheon Enterprise Information Systems

Region III: ECMC

Linebarger, Goggan Pena & Samson, LLP

Region IV: Raytheon Enterprise Information Systems

Region V: USA Funds

Illinois Student Assistance Loan Corporation

Region VI: Texas Guaranteed State Loan Corporation

Student Financial Assistance

Region VII: Missouri Department of Higher Education

Region VIII: Utah Higher Education Assistance Authority

Region IX: Oregon Student Assistance Commission

EDFUND

Region X: Montana Guaranteed Student Loan Program

Washington, DC: AES/Pennsylvania Higher Education Assistance Authority

Puerto Rico: National Student Loan Program

All Sites: USA Funds provided post-it-notes, pens, and pads