By Cheryl Toomey, University Relations Graduate Assistant
All over the country, the average number of students defaulting on loans is rising, but UTC has worked hard to lower our student loan default.
“We attribute UTC’s declining default rates to a focus on educating students about personal finance and loan repayment options. The secret to our success has been the combination of dedicated staff to educate students face-to-face, and our partnership with SALT,” said Dianne Cox, UTC director of financial aid. “With SALT’s help, we’re meeting our students where they are, delivering information to them in the manner they want to receive it and at a time when it’s relevant to their own situation.”
SALT is a financial education resource that teaches students and alumni to make better decisions about managing money, borrowing for college, and repaying student loans. Since October 2011, UTC has partnered with the SALT program to provide students and alumni with additional financial literacy education, support, and loan repayment counseling. SALT integrates with the University’s ongoing “Live Like a UTC Student” campaign, which aims to help students make smarter choices about borrowing and spending while they’re in school.
“We want students to live like a student now, so they don’t have to after graduation,” says Cox. “SALT is teaching our students how to borrow less, how to borrow the right type of loans, and how to develop good budgeting skills, so they’ll be in a better financial position once they leave school.”
Default is a rising national problem for students leaving school, but UTC is taking decisive steps to keep its students out of default.
UTC’s Financial Aid Department offers money management events, tips for budgeting, workshops, guest lectures, and one-on-one confidential financial counseling to students. They help students with a number of financial issues, such as paying for college, student loan management, money management/budgeting, saving/investment education, building/maintaining credit, and debt management.
The Financial Aid Department has been able to add new staff to help students with their finances, including the Assistant Director of Client Services and the Financial Literacy Coordinator. UTC has also acquired a grant from the Chattanooga Foundation of Greater Chattanooga to hire Peer Financial Counselors to help even further with assisting students.
“These positions along with the rest of the financial aid staff create awareness regarding student debt and assist students with questions and counseling in the area of finances and financial aid,” says Jeff Rector, Assistant Director of Client Services/Training and Outreach in the Financial Aid Department.
The Financial Aid Department is also dedicated to raising awareness about student debt throughout UTC and the larger community.
“It also helps to get the financial aid ‘story’ out to other departments on campus, which makes student debt a university issue rather than just a financial aid issue. We continue to build relationships and partnerships with other offices and organizations both on campus and in the community,” says Rector.
The influence of these measures can be seen in the cohort default rate at UTC versus the national average.
The Department of Education uses the cohort default rate (CDR) to track default rates. This measurement is the percentage of cohorts (students entering repayment within the same year) who default on their loans.
The national CDR rate has been on the rise for the past six years. The national two-year CDR (which tracks cohorts for two years) rose from 9.1% in the 2010 fiscal year to 10 % in the 2011 fiscal year. The national three-year CDR, which was implemented to better track how many students went into default, rose from 13.4% in the 2009 fiscal year to 14.7% in the 2010 fiscal year.
However, while national averages continue to rise, UTC’s average CDR has gone down for the past few years.
UTC’s two-year CDR has dropped from 7.3% for the Fiscal Year 2010 cohort to 6.4% for the FY 2011 cohort. The university’s three-year CDR dropped from 12.1% in FY 2009 to 10.6% in FY 2010. The national two-year and three-year default rates, which have risen for the last several years, now stand at 10 percent and 14.7 percent respectively, according to recently released federal data.