Cedar Rapids, Iowa (April 6, 2015)-A default management plan enacted by Kirkwood Community College has contributed to a 6.1 percent decrease in the college’s student default rate. The drop reflects the change in the default percentage of former students who went into repayment beginning in 2012.
In 2011, as default rates started to rise statewide, Kirkwood decided to combat the problem proactively. Nick Neuendorf, a Kirkwood financial aid advisor, was hired by the college to develop a strategy to get ahead of the issue.
“We started an aggressive outreach program to our delinquent borrowers,” said Neuendorf. “Monthly outbound calls are made in addition to sending emails and letters to those that are behind on their payments. We attempt to reach them before their student loans go into default. Once it reaches that stage, borrowers can be subjected to wage garnishment and tax return offsets as well as severe damage to their credit. Since tracking began at the beginning of 2014, we’ve directly resolved over $2.5 million in student loan debt.”
The college also has started reaching out to current students about the importance of keeping their loans in good standing.
“It is equally important to educate our current student population on financial literacy so that they are better informed and better prepared upon graduation,” said Neuendorf. “We advise our students to borrow cautiously – if they need to borrow at all. Financial literacy events happen throughout the year and we encourage students to participate by offering different incentives. Students can also attend one-on-one meetings with a financial aid representative where they are introduced to their student loan servicer, sign up for online account access through the servicer website, and have any questions answered regarding financial aid or their program in general.”
The end goal is to have every Kirkwood student borrowing cautiously by making informed and effective decisions.
“There will be a ripple effect,” said Neuendorf. “If our graduates have the ability to understand how money works in today’s world, that will only strengthen the local economy in our seven county service region.”