MCC Default Management Marianne Gren Devenny Dean of Enrollment Services Leana Davis Director of Financial Aid
Dec 18, 2015
MCC Default Management
Marianne Gren DevennyDean of Enrollment Services
Leana Davis Director of Financial Aid
What we will present
What is a default rate? What is meant by cohort default rate?
The history of MCC’s default rate and default management
How the Department of Education has changed the default rate calculation
MCC’s default management plan
What is a default rate?
Percentage of school’s borrowers who enter repayment during a fiscal year and those borrowers that default (over three fiscal years)
Number of students in default_________ Number of students who are in repayment
If a student is in repayment, the student can have their student loan deferred for multiple reasons, including at least half time attendance at a post secondary institution, medical, and financial issues.
Default Rate Calculation
Example: In 2005, there were 200 individuals who were in
repayment, 33 had defaulted.
_33_ 200
= 16.5%
When can sanctions be imposed?
If a school’s three most recent official 3 year default rates are 30% or greater
Except in the even of a successful adjustment or appeal, a school will lose Direct Loan and Federal Pell Grant program eligibility for the remainder of the FY of the sanction notification and the following 2 FY’s
Higher Education Opportunity Act requires schools with a 3 year default rate of 30% to establish a prevention task force
History of MCC’s Default Rate
cohort default rate, 1994 - 2011
0
5
10
15
20
25
History of MCC's Default Rate, 1994-2010
2001 2004 2009
%
1994
2000
The Inception of the Default Management Plan In 2003, the 2001 rate had increased from 10.6% to
22.3% Illinois Student Assistance Commission provided MCC
with a list of students who were late on repayment Financial Aid contacted students to give them
options and explain the consequences of going into default
Researched students who were in default
Students in default, 2003 research
Majority of these students did not meet Financial Aid Satisfactory Academic Progress (SAP) policyRequired by the Department of Education. MCC’s 2003 policy
required students to: • Complete 67% of their classes satisfactorily • Earn a minimum semester GPA of 1.5
Financial Aid notified current students who did not meet the SAP policy
These students were reminded of their loan obligations
The steps above defined MCC’s Default Management Plan from 2003-2012
Important points to remember
A student’s default rate is determined after a person is no longer a student
Reasons for defaulting:Moving and not giving a lender a forwarding addressEmploymentMedical issuesEducation completedBackground
Year Default Rate
1994 7
1995 11.5
1996 1.7
1997 11.8
1998 14
1999 11.7
2000 10.3
2001 22.3
2002 15.2
MCC’s Default Rate Percentages, 1994 -2002
Year Default Rate
2003 14
2004 21.3
2005 16.5
2006 13
2007 14.6
2008 14.1
2009 21.9
2010 15.3
2011 (draft) 15.8
MCC’s Default Rate Percentages, 2003 -2011
COLLEGE 09 Rate COLLEGE 09 Rate1 ILLINOIS EASTERN COMMUNITY COLLEGES -FRONTIER 9.6 22 COLLEGE OF DU PAGE 202 CARL SANDBURG COLLEGE 12.3 23 LAKE LAND COLLEGE 203 TRITON COLLEGE 12.7 24 CITY COLLEGES OF CHICAGO - KENNEDY KING COLLEGE 20.14 KANKAKEE COMMUNITY COLLEGE 13.1 25 PRAIRIE STATE COLLEGE 20.55 ILLINOIS VALLEY COMMUNITY COLLEGE 13.2 26 HAROLD WASHINGTON COLLEGE 20.86 LEWIS AND CLARK COMMUNITY COLLEGE 14.3 27 KISHWAUKEE COLLEGE 21.37 ELGIN COMMUNITY COLLEGE 14.6 28 BLACK HAWK COLLEGE 21.98 MORAINE VALLEY COMMUNITY COLLEGE 14.7 29 MCHENRY COUNTY COLLEGE 21.99 RICHARD J DALEY COLLEGE-CITY COLLEGES OF CHICAGO 16 30 ILLINOIS EASTERN COMMUNITY COLLEGES - LINCOLN TRAIL 23.8
10 COLLEGE OF LAKE COUNTY 16 31 ILLINOIS EASTERN COMMUNITY COLLEGES - OLNEY CENTRAL 24.411 OAKTON COMMUNITY COLLEGE 16 32 SOUTHWESTERN ILLINOIS COLLEGE 24.612 JOLIET JUNIOR COLLEGE 16.4 33 ILLINOIS CENTRAL COLLEGE 24.713 HEARTLAND COMMUNITY COLLEGE 16.6 34 HIGHLAND COMMUNITY COLLEGE 24.814 DANVILLE AREA COMMUNITY COLLEGE 17.1 35 SOUTHEASTERN ILLINOIS COLLEGE 2515 ROCK VALLEY COLLEGE 17.7 36 REND LAKE COLLEGE 25.916 WAUBONSEE COMMUNITY COLLEGE 17.8 37 JOHN A. LOGAN COLLEGE 25.917 PARKLAND COLLEGE 18.1 38 RICHLAND COMMUNITY COLLEGE 25.918 HARPER COLLEGE 18.6 39 ILLINOIS EASTERN COMMUNITY COLLEGES - WABASH VALLEY 26.619 JOHN WOOD COMMUNITY COLLEGE 18.7 40 CITY COLLEGES OF CHICAGO - MALCOLM X COLLEGE 29.120 LINCOLN LAND COMMUNITY COLLEGE 19 41 SPOON RIVER COLLEGE 29.621 SAUK VALLEY COMMUNITY COLLEGE 19.2 42 MORTON COLLEGE 43.2
2009 Cohort Default Rate Rankings
COLLEGE 10 RATE COLLEGE 10 RATE 1 RICHARD J DALEY COLLEGE-CITY COLLEGES OF CHICAGO 7.5 23 ELGIN COMMUNITY COLLEGE 19.32 CITY COLLEGES OF CHICAGO - MALCOLM X COLLEGE 8.3 24 ROCK VALLEY COLLEGE 19.53 KANKAKEE COMMUNITY COLLEGE 11.3 25 KISHWAUKEE COLLEGE 19.54 CARL SANDBURG COLLEGE 13.2 26 JOHN A. LOGAN COLLEGE 20.55 ILLINOIS VALLEY COMMUNITY COLLEGE 13.5 27 LAKE LAND COLLEGE 20.66 MORAINE VALLEY COMMUNITY COLLEGE 14.1 28 SAUK VALLEY COMMUNITY COLLEGE 21.87 ILLINOIS EASTERN COMMUNITY COLLEGES - OLNEY CENTRAL 14.2 29 BLACK HAWK COLLEGE 22.18 COLLEGE OF LAKE COUNTY 14.4 30 DANVILLE AREA COMMUNITY COLLEGE 22.19 CITY COLLEGES OF CHICAGO - KENNEDY KING COLLEGE 14.5 31 ILLINOIS EASTERN COMMUNITY COLLEGES -FRONTIER COMM 22.8
10 MCHENRY COUNTY COLLEGE 15.3 32 PARKLAND COLLEGE 23.111 TRITON COLLEGE 16 33 RICHLAND COMMUNITY COLLEGE 23.812 OAKTON COMMUNITY COLLEGE 16 34 SOUTHWESTERN ILLINOIS COLLEGE 24.813 LEWIS AND CLARK COMMUNITY COLLEGE 16.1 35 ILLINOIS CENTRAL COLLEGE 2514 ILLINOIS EASTERN COMMUNITY COLLEGES - WABASH VALLEY 16.6 36 LINCOLN LAND COMMUNITY COLLEGE 25.115 ILLINOIS EASTERN COMMUNITY COLLEGES - LINCOLN TRAIL 17 37 HEARTLAND COMMUNITY COLLEGE 26.116 JOHN WOOD COMMUNITY COLLEGE 17.2 38 SPOON RIVER COLLEGE 26.417 WAUBONSEE COMMUNITY COLLEGE 17.8 39 HIGHLAND COMMUNITY COLLEGE 26.618 JOLIET JUNIOR COLLEGE 18.2 40 MORTON COLLEGE 28.419 COLLEGE OF DU PAGE 18.3 41 REND LAKE COLLEGE 2920 PRAIRIE STATE COLLEGE 18.4 42 KASKASKIA COLLEGE 36.721 HAROLD WASHINGTON COLLEGE 18.4 43 WILBUR WRIGHT COLLEGE 10022 HARPER COLLEGE 18.4
2010 Cohort Default Rate Rankings
How the Department of Education has changed the Default Rate calculation In 2011, the calculation changed from a two year to a
three year calculation An increased number of students is used in the calculation More students will not be eligible for deferments in the
calculation The change raised the default rate for most schools Currently the Department of Education does not impose
sanctions against a school until there is a higher default rate
2013-2014 Default Management Plan Pre – Loan Disbursement
Students not eligible for grants packaged with a loan award
Students packaged with grants required to see the Loan Specialist before being awarded a loan• MCC Suggested amounts
Student completes Entrance Counseling
2013-2014 Default Management Plan Cont. Post – Loan Disbursement
Exit Counseling
Review Delinquency Report from National Student Loan Data System (NSLDS)• Letters Sent during early and late stage of delinquency • Students contacted via phone to provide counseling
and servicer information • Students in Default receive information on recovering
via mail
Proposed Reforms
Protect Student Borrowers Act of 2013 Schools with at least a quarter of students take out loans Loan Default Rate reaches 15% in a single year would pay a
penalty of 5% of the value of the outstanding defaulted debt
As the default rate increases the penalty would increase up to 20%
COMMUNITY COLLEGES ARE EXEMPT
2014-2015 Default Management Plan Pre – Loan Disbursement
Students not eligible for grants will receive a letter explaining their payment options • Payment Plan • Scholarships • Loans
Student packaged with grants will receive loan information in their award letter
2014-2015 Default Management Plan Financial Literacy Counseling
Entrance Counseling
Budget Worksheet • Income vs. Expenses • Visit the Financial Aid Office
– Discuss Loan Amounts – Discuss Repayment Options
No changes to the Post - Loan Disbursement Plan