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From Proactive Financial Literacy to Analytics-Based Borrower Outreach: How Truckee Meadows Is Covering the Default Prevention Bases

Recently I had the opportunity to speak with Shari Mathieson, chief specialist for financial literacy and default prevention for Truckee Meadows Community College, located in Reno, Nevada. Shari’s role includes overseeing the college’s FLAME$ (Financial Literacy and Money Education by Students) program. This topic is close to my heart, as we’ve done a lot of work at Student Connections to help schools and students benefit from the connection between sound financial decisions, lower default risks, and higher retention and completion rates.

Shari has been at Truckee Meadows for about 10 years, and has worked in higher education for 15. During her first five years at Truckee Meadows, she worked in admissions and records, then transferred to Financial Aid.

Under the FLAMES program, a team of 8-10 peer mentors teach financial literacy around campus. They do this through workshops, peer mentoring and other outreach. They also attend events at high schools and other area agencies such as the Boys & Girls and Rotary Clubs, where they provide presentations on budgeting, how to apply for financial aid, credit, and conduct other workshops.

Along with this proactive strategy, Shari and her team continue to use responsive tactics to reduce default risks. They use Borrower Connect to make calls each month to students in their grace period, as well as delinquent borrowers, and send emails and letters to help them get back to good standing. These outreach campaigns educate borrowers about different repayment options, connect them with loan servicers and leave them with a better awareness of how they can avoid default.

At the end of the year, when Shari gets her draft cohort default rate (CDR), she completes an analysis of defaulted borrowers to identify predictive characteristics that can help borrowers avoid delinquency and default in the future. This is a great way to make “reactive” measures an important contributor to the bigger, proactive default prevention strategy.

Shari told me she began analyzing defaulters to assess trends in graduation rates, remedial classes, late registration, and other factors that could contribute or at least correlate with defaulting. This would allow her and her staff to better target intervention that would have the most effect on helping borrowers avoid default.

“One area of focus to find out was what the top declared degrees were for defaulters,” Shari told me. “We presented the results to the academic deans to get their input, and they were really interested in the data.” Shari’s research, which is ongoing, is also revealing which degrees correlate most with non-defaulters. Shari believes just the process of conducting the research is resulting in more input and interest in default prevention in departments around the campus.

To enable this type of analysis, Shari’s team worked with ELRDR (electronic loan record detail report) data. Her team brainstormed some characteristics they thought might be relevant variables in default prevention. Because the staff had been noticing some trends for the past several years, they had a good idea of what to begin with. They included factors like late registration, being a first-generation student, withdrawing, SAP status, GPA, and credits attempted and completed in their study.

Some of their initial results surprised them. For example, late registration was less a factor than they had anticipated. However, they did observe a strong risk factor for first-generation students and low-income students. On the other hand, distance education was not a major factor, although there was a correlation between taking remedial classes and later defaults.

Shari’s predictive analysis is yielding many opportunities to be more proactive. She hopes the school will move to more of a corequisite model rather than relying on remedial classes to increase retention and engagement of students that need extra academic support at the start of their college journey.

The process has also generated a wealth of information that is guiding targeted communication strategies that are benefiting from more buy-in from other campus staff. The findings have helped the FLAME$ program fine tune its outreach and have helped with developing in-person entrance counseling for student loans.

In the meantime, Shari and her colleagues continue to use Borrower Connect to plan their borrower outreach and reach as many students as they can. “It’s been an invaluable tool for us in assisting our efforts to reach out to delinquent borrowers and provide them with the help and resources that maybe they don’t know is available to them,” she said.

From helping current students obtain key nonacademic skills to providing counseling to borrowers who are in repayment, Shari and her team are exemplifying the benefits of a holistic approach to default prevention. What tools does your school use to help current and former students succeed outside of the classroom?