Introduction and Background
Although not required by the Department of Education to have a default prevention plan in place, the Financial Aid Office at Hawaii Community College makes significant efforts in the areas of default prevention and debt management. This document, a part of Hawaii Community College's Financial Aid Policies and Procedures, describes these efforts and presents information about the institution's loan program that helps guide these efforts. The Financial Aid Officer is responsible for implementation of this plan.
Hawai'i Community College Student Loan Borrower Population
To understand the default prevention and debt management efforts for loan borrowers, it is helpful to see Hawaii Community College's borrowing population in the context of the institution. Hawaii Community College serves almost 4,000 students annually and processes over 500 loan applications per academic year. In the Fall 2008 term, Hawaii Community College had 2,884 enrolled students, 54% of which were part-time. For the 2007-2008 academic year, Hawaii Community College awarded 3.1 million dollars in grant aid to 53% of the student body, and only 7% of these students took out student loans in addition to grant aid. In contrast to Hawaii Community College's 7% rate of borrowing in 2007-2008, the national average of borrowers among first-time full-time students in 2-year public institutions was well over 20% in 2007-08. (Drowning in Debt: The Emerging Student Loan Crisis, Dillon and Carey, 2009.)
Hawai'i Community College's Historical Default Rates
Hawaii Community College's default rates, over time, have fluctuated widely – primarily due to the small size of the cohort – two or three additional borrowers who default in a particular cohort can have a sizeable impact on the resulting cohort rate.
|DOE Cohort Year||DOE CDR||# in Repayment||# in Default|
Hawaii Community College's 2008 Draft Rate (released in February of 2009) is: 14.4% (14/97), and the school's trial three-year rates (from NSLDS trial rate reports) are: 2005 3-year trial is 15.3%; 2006 3-year trial is 19.2%; and 2007 3-year trial is 26%.
The table below show Public 2-year Associate Degree granting schools with similar sized cohorts (+/- 10 borrowers) and their 2007, 2006, and 2005 rates. These institutions provide benchmarks for Hawaii Community College, and show that similar institutions with same size cohorts also experience wide fluctuations in rates over time.
|School Code||School Name||State||07 N||07 D||07 Rate||06 N||06 D||06 Rate||05 N||05 D||05 Rate|
|007738||Southern Arkansas University Tech||AR||17||107||15.8||17||128||13.2||15||123||12.1|
|001102||Ouachita Technical College||AR||12||107||11.2||11||71||15.4||5||69||7.2|
|001224||Los Angeles Harbor College||CA||5||107||4.6||5||87||5.7||6||87||6.8|
|013536||Coastline Community College||CA||6||109||5.5||10||123||8.1||11||121||9|
|001485||Florida Keys Community College||FL||21||110||19||16||126||12.6||12||122||9.8|
|009231||Washington County Comm Coll||ME||13||110||11.8||9||59||15.2||9||122||7.3|
|008038||Middlesex Community College||CT||18||111||16.52||12||91||13.1||2||41||4.8|
|001913||Dodge City Community College||KS||18||112||16||21||155||13.5||9||130||6.9|
|001191||Diablo Valley College||CA||6||114||5.2||10||139||7.1||17||156||10.8|
|010390||Windward Community College||HI||11||114||9.6||21||133||15.7||15||153||9.8|
|001104||Phillips Comm Coll of the U of AR||AR||10||115||8.6||15||152||9.8||15||99||16.1|
|005258||Hawaii Community College||HI||24||117||20.5||18||140||12.8||12||143||8.3|
|014311||Berkeley City College||CA||19||118||16.1||12||112||10.7||9||105||8.5|
|006982||Naugatuck Valley Community College||CT||13||119||10.9||5||139||3.5||7||119||5.8|
|004453||El Centro College||TX||10||121||8.2||16||137||11.6||13||123||10.5|
|003816||Southern WV Comm and Tech College||WV||22||121||18.1||21||115||18.2||6||66||9|
|001643||Spoon River College||IL||18||124||14.5||28||146||19.1||12||112||10.7|
|008597||Feather River College||CA||11||125||8.8||21||125||16.8||16||91||17.5|
|006981||Gateway Community College||CT||13||126||10.3||7||149||4.6||10||123||8.1|
|034835||Cascadia Community College||WA||6||126||4.7||10||143||6.9||8||142||5.6|
|009765||Three Rivers Community College||CT||8||127||6.2||16||138||11.5||9||122||7.3|
|001669||Danville Area Community College||IL||19||127||14.9||23||121||19||11||108||10.1|
|037894||River Parishes Community College||LA||16||127||12.5||5||70||7.1|
Organization of Debt Management Activities
This document is organized using Hawaii Community College’s “Life of the Loan” approach, and describes the default prevention and debt management efforts of the Financial aid Office at each stage of the borrower’s loan:
- Pre-enrollment Activities
- At initial enrollment/application for financial aid
- Upon re-borrowing for 2nd year
- Upon withdrawal or graduation
- Upon entering repayment
- During repayment/cohort management
The Hawaii Community College Financial Aid web site provides information pertaining to student loans. This site includes links to the Department of Education’s Direct Lending program as well as the USAF Life Skills Modules. Financial Aid Counselors conduct workshops on campus, at local high schools and for faculty/staff. They also present the Financial Aid Overview at all mandatory new student orientation programs. All of these sessions and workshops include information on borrowing and repayment.
At initial enrollment/application for financial aid
The loan section of the Financial Aid Office web site expresses the philosophy of careful consideration before borrowing and emphasizes the potential hazards of over borrowing. The packaging philosophy focuses on grant and gift aid—loans are not part of a student’s award notification. All students who qualify for a loan receive a letter from the Financial Aid Office informing them that the loan application has been processed and what their total loan indebtedness is. First-time borrowers must complete three Life Skills Modules prior to loan certification. After a student’s loan is disbursed, a notification is sent to the student informing them that they have the option of reducing or cancelling a portion or the entire loan.
Upon re-borrowing for 2nd Year
The Financial Aid Office has required that second-year borrowers still complete entrance counseling to remind them of their borrowing obligations and their increasing debt. In addition, the completion of five Life Skills Modules is required prior to loan certification. Financial Aid Workshops on scholarships, student employment and life skills management are offered monthly.
Upon Graduation or Withdrawal
The Hawaii Community College Registrar’s Office sends a report to the Financial Aid Office of students who have applied for graduation. The Financial Aid Office contacts these students to notify them of the exit counseling requirement, and online as well as in-person exit counseling are offered. Students who do not complete the required exit counseling have a hold placed on their student account which prevents them from receiving their diploma or any Hawaii Community College services until the exit requirements have been satisfied.
Students who withdraw from Hawaii Community College are sent an exit packet which directs them to studentloans.gov to complete their exit counseling. The USA Funds Student Loan EXIT Interview form is included in the packet, and students are asked to return the signed and completed form to the Financial Aid Office.
Upon entering repayment
Hawaii Community College has used USA Funds Debt Manager to communicate with borrowers as they enter and make their way through repayment. A letter, sent monthly after the borrower is 60 days delinquent, helps negotiate the transition to repayment. Jody Adviento-Turner is the primary user of the software and is the students’ contact throughout repayment.
During repayment/cohort management
Throughout repayment, Hawaii Community College uses USA Funds Debt Manager to send delinquency, deferment, and forbearance letters and emails to borrowers. This tool has been used for several years. This communication generally generates telephone conversation with the borrowers, and Jody Adviento-Turner is the primary owner of the activities managing this communication. Borrower detail reports are monitored.
Measuring the Effectiveness of Hawaii Community College's Plan
Each year, Hawaii Community College will evaluate its financial aid packaging policies, taking into account institutional as well as student needs. The focus of this review will be to encourage conservative borrowing by students and to promote scholarships, other gift aid, and federal work/study in lieu of loans, and will tie into the institutional effectiveness plan. The Financial Aid Officer will examine on an ongoing basis this default management plan to assess its effectiveness. As part of this assessment, the Financial Aid team will work closely with its regional USA Funds debt management consultant, evaluate plans used by other institutions, review useful Web sites, and attend default prevention conferences and workshops to ensure that Hawaii Community College delivers the most effective programs and services to its students.