default rates
What do you think about sharing the schools default rate with students? I know they can and should access this online, but do you think it would help them to understand how they play a role in helping or hurtin future students and their ability to borrow?
Schools are required to disclose information about default rates and they are publicly posted. This information would probably not influence most borrowers to pay or not pay. Educating them about their obligations and options is much more effective.
I think that sharing the default rate is essential to students knowledge on how it can affect them and future student's who attend that institution or try to attend another school. The school would have to find ways to simply the explanation of the cohort rate and its effects positive and negative in order for the student's to understand their responsibilities and how it may hurt or help their ability to borrow in the future.
Seeing a default rate, or at least being introduced to the concept, may help drive home the fact that defaults are a problem for many borrowers. This could serve as a further warning to take financial obligations seriously (i.e. “if it happened to so many of my peers, it could easily happen to me”).
This might be a strategy to counteract the inclination some students have to assume that unpleasant possibilities are in fact highly unlikely possibilities.
I think it is important for students to be aware that defaulting on a student loan it not only affects the individual student, but it affects the school and future attendees. Many students are not aware of this and think that by not repaying the loan it only affect the individual credit rating.
I agree. I think it is also important to keep staff reminded of the fact that the default rate affects the future of the school as whole and that their participation is vital.
i was also wondering if this could help improve default rates. i understand this information is publicized but i wonder if truly "talking it up" could help.
David,
When I complete loan counseling sessions with students I try to emphasize their role in enhancing the school's reputation by being successful in their personal student loan repayment. Not only does the school benefit, the student benefits as well because he or she attended a school with a good reputation. Also, emphasizing the school's concern for a good default rate, and sharing student success stories with managing their debt, help students realize that they too can be successful in managing their individual loans.
Diana Mateer
I agree - and it helps the student not feel so alon eif they are strugglign with repaymnet. I think shame is a factor in students and grads not seekign help from the institution..takign an ignor it and it will go away approach. It's nice to know youare not alone.
At it's worst, default rates can also affect the reputation of the school. Poor school reputation will follow the student if that is where they obtained thier diploma.
Allison,
Excellent point. Knowing that so many of their peers have faced the same struggle may help students understand not only that they are not alone, but that solutions and coping strategies exist. We want to communicate that the entire school, including faculty and alumni, have an interest in student debt management and default prevention, and we will help each other to find solutions during difficult times.
Cheryl Kesson
Perhaps it would be helpful to introduce the concept of default rates along with other professional development information. In addition to building a good resume, learning to present oneself to employers, and following trends and opportunities in their industry, students can also think of good credit and student loan repayment as part of cultivating overall professionalism. If more students than not take this approach, the school can become known for producing responsible, desirable job candidates.
