Although there is broad awareness of how important default prevention is for the mutual success of institutions and student borrowers, the Oklahoma College Assistance Program (OCAP) sought to further capitalize on this connection. To do so, Mary Heid, OCAP’s executive director, developed a strategy that focuses on the institutions that faced the greatest challenges – and opportunities – in this area. She formed a partnership with Student Connections, a nonprofit organization dedicated to helping students succeed during and after school, to provide default rate management support to member institutions with (cohort default rates) CDRs above 10 percent.
OCAP is a division of the Oklahoma State Regents for Higher Education, which oversees a state system of more than two dozen colleges and universities. The program helps students and families in areas that include college access, financial aid awareness, financial literacy, and student loan management resources.
Under the partnership with Student Connections, eligible schools received access to Borrower ConnectTM, Student Connections’ patented student loan management and borrower outreach solution. Borrower Connect pools all cohort data in one secure, web-based platform that generates predicative analysis to help reduce CDRs. Borrower Connect also uses data to inform borrower engagement campaigns that match the most effective messaging and delivery methods to the unique circumstances of individual student loan borrowers. This allows Student Connections’ success counselors to provide enhanced outreach to borrowers in various delinquency stages, as well as those with loans in grace period.
“We were seeing cohort rates begin to rise, and we wanted to do something to help our institutions and their student borrowers be more successful in their repayment - and thus reduce defaults,” said Heid. Since Borrower Connect generates a range of key performance indicators and other metrics, she was confident that OCAP would be able to easily measure the effectiveness of its investment in helping Oklahoma schools and their borrowers.
Data indicates that Borrower Connect’s proactive approach is creating a major impact. “Our schools all seem extremely happy with the service we’ve been able to offer them through Student Connections,” said Heid. “Our state CDR has been declining at a greater pace than the national rate, which we believe is a key indicator that our service is working.”
In fact, Borrower Connect is helping partner schools realize a CDR reduction that has outperformed the national trend at peer schools by eight percentage points. Their CDR decrease also was greater (7.2 percentage points) than what public institutions in nearby states experienced.
These improvements also are reflected in data that aggregate delinquency cures. In fiscal year 2016, Student Connections drove 33,700 OCAP borrower resolutions, accounting for approximately $272.8 million federal student loan dollars (based on estimated average outstanding principal balance).
Grace counseling has emerged as an important tactic in OCAP’s success in reducing CDRs. Because grace period counseling includes borrowers who have left school without graduating, it offers an early chance to engage a segment of the student community facing one of the gravest risks of defaulting. This is why Student Connections trains its counselors to help borrowers determine the course of action best for their situation, which can include a return to school and completion. In total, since the OCAP partnership with Student Connections began, data show that students who underwent grace counseling were 41 percent less likely to enter delinquency on their student loans.
“We’d rather be proactive than reactive,” said Heid. “The grace period counseling empowers our schools to retain a relationship with borrowers once they’ve left the campus. The sooner we can reach these borrowers and assist them with a transition into repayment, the better.”
Whether it’s measured in reduced default and delinquency rates or in the hundreds of millions of cured federal loan dollars, it’s clear the OCAP-Student Connections partnership has helped preserve the value proposition of higher education in Oklahoma. As Heid said, “I think this investment in our students and institutions is rather unique, and we are very pleased that we’ve been able to collaborate with an industry partner that shares our vision of student success.”
You can learn more about Borrower Connect here.