The University of Tennessee at Chattanooga has lowered its three-year student loan cohort default rate. The U.S. Department of Education uses the cohort default rate (CDR) to track default rates. This measurement is the percentage of cohorts (students entering repayment within the same year) who default on their loans.
“We attribute UTC’s declining default rates to a focus on educating students about personal finance and loan repayment options. The secret to our success has been the combination of dedicated staff to educate students face-to-face, and communication with former students about loan repayment options,” said Dianne Cox, UTC director of the Office of Financial Aid at UTC.
The university’s three-year default rate dropped from 12.1 percent for fiscal year 2009 to 10.5 percent in fiscal year 2010; the most recent three-year default rate is 8.9 for fiscal year 2011. The national three-year default rates, which have risen for the last several years, now stand at 13.7 percent, according to recently released federal data.
UTC developed the Financial Wellness Center to inform students of the importance of good decision making when it comes to paying for college.
“Educating students and parents regarding the financial aid process is the starting point for limiting student debt. We do this in the community by partnering with local high schools and after school programs. On campus, we offer this information and other financial information through our Financial Wellness Program,” said Dr. Jeff Rector, assistant director of Client Services/Training and Outreach in the Financial Aid Department.
The Financial Wellness Center at UTC recently hired three Peer Financial Coaches who work with students in the areas of finances, budgeting, spending, and other general financial topics.
Upperclassmen with a background in business and finance are trained to help not only UTC students and prospective students in the surrounding community.
In after-school programs for middle-school students and programs for high school students, the Peer Financial Coaches explain the importance of saving and budgeting for college expenses. They also take an active role in helping prospective college students complete the Free Application for Federal Student Aid (FAFSA).
“Money management, particularly when it is mismanaged, impacts every area of one’s life. These financial wellness initiatives serve as a prime example of how UTC strives to ensure student success both now and after graduation,” said Bill Parker, who runs the Financial Wellness Center.
The Office of Financial Aid helps students to understand how their debt affects all aspects of higher education.
“Although student debt may directly affect the student, the ramifications of student debt are far reaching,” said Dr. Rector.