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Default Prevention Plan

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.

  Borrowers
DOE Cohort Year DOE CDR # in Repayment # in Default
1997

28.9%

0

0

1998

17.0%

0

0

1999

10.8%

0

0

 2000

22.0%

0

0

2001

12.9%

0

0

2002

13.1%

0

0

2003

16.1%

0

0

2004

7.0%

100

7

2005

8.3%

143

12

2006

12.8%

140

18

2007

20.5%

117

24

Default Prevention 2

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
001217 Lassen College CA 31 122 25.4 21 117 17.9 15 99 16.1
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
013537 Waycross College GA 9 125 7.2 9 116 7.7 14 128 10.9
006981 Gateway Community College CT 13 126 10.3 7 149 4.6 10 123 8.1
008308 Cecil College MD 14 126 11.1 12 126 9.5 10 111 9
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:

  1. Pre-enrollment Activities
  2. At initial enrollment/application for financial aid
  3. Upon re-borrowing for 2nd year
  4. Upon withdrawal or graduation
  5. Upon entering repayment
  6. During repayment/cohort management
  1. Pre-enrollment Activities

  2. 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.

  3. At initial enrollment/application for financial aid

  4. 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.

  5. Upon re-borrowing for 2nd Year

  6. 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.

  7. Upon Graduation or Withdrawal

  8. Graduation:
    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.
    Withdrawal
    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.

  9. Upon entering repayment

  10. 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.

  11. During repayment/cohort management

  12. 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.


Download Default Prevention Plan Document in PDF Format

PDF Document  Default Prevention Plan Document