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CWC makes gains on loan default rate, easing threat of federal pressure

Jan 22, 2014 - By Katie Roenigk, Staff Writer

Federal student loan default rates are falling at Central Wyoming College due to several initiatives being implemented at the school.

Most recently, CWC's default prevention committee hired Wright International Student Services in an effort to address the issue. The company contacts "delinquent" students in order to help them avoid loan default, which comes after nine months of nonpayment.

"They track all of those (delinquent) students on a monthly basis," said Jacquelyn Burns, assistant dean for enrollment services at CWC. "The minute they're 31 days (past their last payment) they'll start contacting the students to try to work with them."

'Cured' accounts

Connie Nyberg, president of CWC's professional personnel association, said students don't necessarily pay cash in order to avoid delinquency or default.

Often, they are simply put in touch with their lenders to explore other options, like income-based repayment plans.

"They're communicating ... so they can make arrangements and get caught up," Nyberg said.

After one month on the job, she said WISS already has "cured" 15 delinquent student accounts at CWC, including five from 2012 and 10 from 2013.

"Considering our small numbers, that really is a significant impact in a short amount of time," Nyberg said. "We really are proud of what they've done with that default prevention."

Federal threshold

A 30 percent three-year loan default rate triggers federal interventions and potential punitive actions after repeated offenses. CWC had come uncomfortably close to that number recently, with the three-year loan default rate set at 25.8 percent in 2010 and 22.3 percent in 2011.

"We've been on the edge, so to speak," CWC Board of Trustees chair Charlie Krebs said.

Burns pointed out that 2010 was the first year the federal government started tracking loan defaults over three years instead of two years. The change technically led to an increase in the loan default rate at CWC, and at schools throughout the country.

"For 2010 our two-year (rate) was 14 percent, and the 2010 three-year was 25 percent," Burns said. "So it doubled."

Improvement

Moving forward, the 2012 cohort includes 306 borrowers with a three-year loan default rate of 18.6 percent. Fewer students (285) borrowed in 2013, and only one, or .35 percent, is now at risk for default.

"That cohort just started Oct. 1, 2013," Burns said of the latter group. "So that one should be super low right now, and hopefully we can keep that one way down."

The 2013 cohort may have benefitted from CWC's new debt management initiatives which have been instituted in order to address the growing loan default rate. In 2011, the school decided that students who borrow money must undergo one-on-one loan counseling, and certain students must submit budgets and justification documents along with their loan applications.

Financial literacy

Since last fall, students at CWC have been required to take a financial literacy course to meet their general education requirements, and all first-time borrowers have to pass the class with a C or better before they can receive all of their loan money.

The college also is working with K12 school districts throughout the county to address financial issues students face when they transition from high school to college.

Trustees commended Burns for her work with the default prevention committee.

"That's been a burr under our saddle for a long time," trustee Roger Gose said of the school's loan default rate.

Trustee Colton Crane said the improvement seems "too good to be true."

"It has exceeded our expectations," CWC president Jo Anne McFarland agreed.

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Central Wyoming College