UACCB sees student loan default rates drop

BATESVILLE, AR (KAIT) – One local college has seen an encouraging sign of success after unpaid student loans almost cost it the ability to give out financial aid.

UACCB, or the University of Arkansas Community College at Batesville, saw its student loan default rate spike two years ago, when it reached 31.6 percent.

The administration ramped up efforts to reverse the troubling numbers because maintaining that high of a default rate could carry serious implications, according to Brian Berry.

"Federal regulations require you to be below 30 percent," said Berry, the UACCB vice chancellor for enrollment management and student services. "If you're over 30 percent for three years, you can receive sanctions including losing your ability to give financial aid, so certainly it's a huge issue."

Facing that dilemma, he says the school formed a default task force that united school administrators, staff members and faculty to work toward some solutions. One of the first things they did, Berry claims, is focus more on educating students about the financial responsibility of taking out a loan.

In the past, students always underwent counseling before getting a loan. Berry said the task force recommended enhancing the counseling services, which included making students complete a five-part financial literacy course online.

"We [also] want to sit down with them and make sure they understand the repercussions of taking out a student loan and that they do have to repay that," he said. "We make the students do some budgeting. They actually have to figure out what their payment will be, so they understand completely what their future obligations are and then that there's no way to get out of those obligations."

In addition to the extra education, Berry says UACCB put a renewed effort on outreach to the students that have left school and are about to enter repayment.

"What we'll do is contact them, let them know about the options that are available for either forbearance or deferment for their student loan," he said. "There are also some programs like income-based repayment, so if a student is just starting out and has a low income their student loan payment can be based on their income."

After putting these policies in place in 2011, Berry said it appears they've begun to pay off. The latest unofficial numbers indicate the default rate has fallen to 28 percent.

"We've been able to lower our rate four percent over the last two years," he said. "Even though there's sometimes a lag when we institute those new policies and procedures until we see a payoff, we have pretty quickly seen a drop in our default, and we're confident it's going to continue to go down."

Berry says the school no longer has to fear federal sanctions and has even been contacted by other colleges needing help with this problem, too.

He hopes UACCB can lower the default rate to 25 percent, a much more manageable level, in the next few years.

"With the success we've seen," he added, "we're going to continue down the road we've started and hopefully to continue to lower that default rate every year."

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