Seven Steps to Make Your 2016 Default Prevention Strategy

Posted by Joe Crosby

1/6/16 1:58 PM

Preventing student loan default comes easily for some schools. These schools usually combine solid academic and campus practices with a good reputation and an advantageous student population to keep their default rate down. 

For all other schools, preventing default requires a plan. If the act of recycling the 2015 calendar and pounding a nail into the 2016 calendar gets you in the mood to make a plan, then you've come to the right place.

Here are seven steps to a 2016 strategy that will get your team motivated to fewer defaults.  



Preventing a student loan borrower from defaulting is an emotional thing. Helping someone improve their financial life feels good and losing a former student to default feels bad.

But to start your plan, be pragmatic. Gather your historical 3-year CDRs at, download important reports from NSLDS, and run a CDR Snapshot to get an idea where your FY2013 cohort settled and how your FY2014 and FY2015 are faring. 

Compare your school's CDR to others in your state and school type. Finally, measure yourself against your competitors - those 5-10 schools with a similar program, makeup, or location - and document their CDR.


Budget a couple hours to look into the past. Grab a Default Summary Report from NSLDS (here's how) to get a better idea of what type of student loan borrower is defaulting. Answer: 

  • How long was this person a student at your school? 
  • Did the student graduate?
  • What program did s/he study? 
  • When did s/he complete entrance and exit counseling?
  • How much did s/he borrow? 

You'll need to be close to your student information system to grab this data because the Default Summary Report only has basic student detail.

This look to the past will inform your strategy for the future and help you save similar students. 


Now that you have raw data about the students that have defaulted in the past, create a fictional character that summarizes your most common defaulter and give her a name. Would your defaulter be male or female? Did he borrow a lot or a little? Was she undecided in an academic program or is there a common program that saw many students default? First-generation? Pell recipient? Did he attend new student orientation programs or miss? Did he receive outreach while delinquent?

Why are you going through this process? So you know the type of student you'll need to give more attention to in the future. 


Now is the time to move away from numbers and inspire humans. When staff from alumni affairs, academic advising, enrollment management, business affairs, and institutional advancement join forces with academic offices and the financial aid office, well, there's no stopping what can be achieved. 

But more importantly than creating an all-star team to tackle default, you get different viewpoints how your school as a whole can teach financial literacy to current students and reach out to struggling student borrowers in repayment. 


If your school hasn't performed a ton of delinquent outreach in the past, like any resolution that starts in January, you'll need habit-forming practices to make it stick. Once you've chosen how you'll contact delinquent borrowers, turn the actions into habits. To turn default management into a habit schedule 15 minutes EVERY DAY YOU'RE IN YOUR OFFICE for default management such as: 

  • Making 2 to 4 delinquent outreach calls or emails per day and ask your team to do the same 
  • Telling other people that you plan to have the lowest default rate of your competitor set. Nothing builds a habit like telling other people how you're going to achieve and nothing makes it more fun than a little competition.
  • Preparing and sending outreach reports. Inform your team on the number of emails sent this week, the number of calls made, and what percentage of contact information was found reliable. 
  • Preparing and sending monthly cure data. Report to your team how many students moved off the delinquent list. 

Unlike their bad alter ego, GOOD habits are hard to form, but if you can diligently make default prevention part of your daily routine in these cold months, by spring it'll just be another part of your day. 


Student loan borrowers get entrance counseling and they get exit counseling. We all can agree that supplementing those experiences and bolstering what they learn before and after this counseling will help students understand their loans and the life changing impact of default.

Remember that fictional student you created in step 3? Your financial literacy workshops need to reach this student.

So, if you're finding your fictional student left 6 weeks into the term, extended compulsory early financial literacy may prove incredibly important. If your fictional student is online, perhaps your workshops will be digital, but followed-up with a phone call. If you find that your typical defaulting student didn't "listen" in exit counseling, grace period outreach may an effective touch point.

Build a strategy for your financial literacy outreach and sessions based on the student who is most likely to default.  


After a few months of this, you'll have a whole new set of data in front of you. Maybe you'll find that students less than 100 days delinquent are curing with just an email and that phone calls to students 200+ days delinquent were very effective.

You might find that your contact list was only partially reliable and that the cost and time associated with mail wasn't worth it. 

Success will come by seeing what works and modifying your plan for effectiveness. 

Plan to pull the group back together in the spring to see how things are going and make adjustments.

Best of luck to a 2016 with fewer defaults! 

Take a look at the CDR Snapshot