Background:
In fiscal year 1991 Danville Area Community College (DACC) Cohort Default Rate was at a high of 32%. This was due to a number of various factors. The dire consequences of losing all student aid programs was feared and an acceptance that the school must act and do so quickly was obvious.

Thus, a Default Management Plan (DMP) was initiated with a campus wide team to develop strategies to identify why the problem occurred and what DACC might do to alleviate it.

DACC has chosen a proactive policy in the management of Stafford loan certification, loan counseling and consumer education. DACC actively tracks borrowers before and during repayment and implements a variety of default reduction strategies.

Getting Started with DMP:
– Compiled the data from the Cohort Report
– Accessed data from student's file to create a profile
– Developed a synopsis of data
– Developed a synthesis of findings
– Researched rules and regulations to insure we were in compliance
– Presented material and Plan to school governing authority
– Presented Default Management Plan to Dept. of Education
– Developed a review process to evaluate effectiveness/success of Plan

Implementing the DMP:
–  Reviewed all material given to students and prospective students and made sure updates of new policies were in all materials
– Posted the policies on billboards in high traffic areas across campus. Added information to the DACC Internet pages.
– Included policies on all SAP literature and progress letters to students
– Updated FAO Procedure manual to include all steps needed to follow policies
– Posted literature of “in-house” payment plan, DACC Foundation Scholarships, scholarship information Internet based “search engines” & alternative loan options

The packaging philosophy at DACC is to council on the loan programs as a “last” resort to meet educational expenses. Students are provide information in regards to the DACC Foundation scholarships, scholarship search engines such as FastWeb and encouraged to visit the DACC WEB page for scholarship listings. Students are also provided with information concerning the DACC tuition payment plan provided by FACTS Tuition Management Company.  All files are verified for the accuracy of the FAFSA data elements. Each student completes the Institutional Verification Worksheet Form and submits it with supporting documentation relevant to the Award Year before any determination of eligibility for programs begins.

(Note: A student who has had a  past loan default that is reflected on a Student Aid Report must have an updated Student Aid Report (generated by NSLDS updates) that reflects the default status has been resolved before any Title IV and/or State student aid will be awarded. DACC will not except "Letters of Good Standing" from any agency.)

The DACC FA staff do not use the FAFSA results (the ISIR) to determine if a student will request a Stafford Loan. It has been the staff's experience that many students do not understand this question nor answer it properly. It is staffs summation that a student must know the whole of the cost at the school as well as their funding resources before making the determination a Stafford loan is needed.

A student who completes the DACC Stafford Loan Request Form (provided with their Award Letter, in bulk in FAO Lobby and on-line ) and submits it to the DACC FAO it will be reviewed for eligibility for the program.

34 CFR Section 668.202(e)(1) of the Federal Direct Loan (DL) Program provides that a school may refuse to certify a DL Stafford or PLUS loan application or may reduce the borrower's determination of need for the loan if the reason for that action is documented and provided to the student in writing provided the determination is made on a case-by-case basis.

Semester processing priority deadlines are established as to the last date a student may request a loan. These are well published and adhered to. There is an appeal process to address these deadlines for extenuating circumstances. Stafford Application Processing Checklist: Have you been approved for a loan at DACC and want to be sure you have completed the steps for loan processing? If yes, Click here

Federal Stafford Subsidized and Unsubsidized:

Once  the student has submitted the DACC Request for a Stafford Loan form eligibility for a loan will be determined.  As part of the DACC Default Management Plan all requests for a Stafford loan are reviewed on a case-by-case basis. The Director may request an interview with the student in addition to the student attending entrance counseling (click for on-line Entrance counseling link). Students are notified in writing if they are not eligible for a loan and the reason. If the student is determined eligible a letter to attend the entrance loan counseling session is forwarded with the loan packet. The student may also use electronic means to complete a loan application if his or her lender offers this option. When counseling is completed and packet (or electronic application) is returned to the the FAO the certification process begins.

All borrowers must wait until thirty days after the start of the semester for loans to be disbursed. Students who request to "charge" books at the DACC bookstore based on loan proceeds may do so with no fees charged. The tuition, fees and books are deducted from the loan net amount and proceeds released to the student. The second semester disbursement also has the thirty day release criteria.

It is rare that an Independent student has eligibility for the full Stafford Subsidized and the additional Un-Subsidized Stafford at the maximum loan limits due the Cost of Attendance (COA). DACC does not encourage excessive borrowing and councils every student to borrow at the minimums needed to meet educational costs (direct and indirect).

Key Points in Loan Entrance Counseling Sessions:
• Review program of study and plan of completion date (Degree Audit preferred on file)
• Review current as well as long range budget
• Emphasis using other resources to eliminate or reduce the need to borrow
• Emphasis the maximum loan limits (including lifetime limits for transfer students)
• Emphasis to the transfer student that they likely will need to borrow at their four year school to meet direct costs.
• Review monthly payment amounts based on total loan debt estimates
• Emphasis the importance of good credit and how borrowing now can affect all future consumer decisions
• Emphasis other “consumer” credit items such as credit card debt, financing a new car or home

Parent Loan for Undergraduate Students:

Parents who wish to apply for the Plus loan may request an application from DACC or submit their own (via Internet or paper). The amount is limited by the cost of attendance and other resources available for the loan period (need or merit based awards).

If a Dependent student's parent is denied a PLUS loan and the student request the Unsubsidized Stafford this request will be honored. The denial must be documented from the lender/servicer and filed with the Stafford loan paperwork.

All Title IV (this includes the loan programs) recipients must be meeting Satisfactory Academic Progress Standards and enrollment requirements. Click here to review the SAP policy. DACC's FAO and Records management office work closely to monitor the Tenth Day Enrollment Roster, the Mid-Term Report and the end of semester Grade Report. In addition, individual copies of the Student Add/Drop slips are forwarded to the FAO.

This information serves as a resource to monitor attendance, compliance with the minimum enrollment regulation for Stafford loans and the Return of Title IV Funds regulation.

If a student has withdrawn from a class an immediate acknowledgment of this is made by the FAO that reminds the student of SAP policies as well as enrollment issues concerning Stafford loans.

If a student drops below half-time enrollment or totally withdraws from the school Exit Counseling material is mailed to the home with an invitation to meet with FAO staff to discuss the material.

Students are required to access the StudentLoans.gov Internet site and complete the Exit Counseling Session upon graduation. transfer or total withdrawal of courses.

Key Points in Loan Exit Counseling Sessions:

• Students’ total debt and  estimated monthly payment
• Lender/servicer contact information
• The Loan Locator handbill from NSLDS
• Information regarding the Department of Education's Loan Ombudsperson office. Click here for their WEB page
• The ISAC Navigating Repayment brochure which details forbearance, deferments and the consequences of default
• Change of Address/Phone Number forms for lender/servicer

Tracking Procedures:

The DACC FAO works closely with the DACC records office to monitor Graduates. The Intent to Graduate form is used to identify those who will be graduating by next term. These graduates, who were Stafford loan borrowers, are notified and provided with Loan Exit Counseling materials and invitation to meet with FA staff to review.

Another source used is the ISAC Default Aversion Assistance Roster (DAAR) notices. These notices are used to send a letter to the student indicating contact information, consequences of default and how to avoid it. Included with the notice is an Update form for address, phone, name change if we are aware of any changes we will send this information to ISAC as well as asking the student to do so.

DACC uses the National Clearing House and reports all attendance in a preset cycle throughout the year.

The campus as a whole must commit to Default Management. It is not just a financial aid office “issue”. The integrity and availability of financial aid programs are at risk for all future students. The role of the financial aid office is to keep the campus current on issues and monitor the application and success of the plan.

The faculty at DACC has designed a New Student Orientation class (Sucess in College) for all first time attendees at DACC. A session of this class is dedicated to consumer education including student loans. The FAO staff present this session and invite speakers such as staff from Consumer Credit Counseling Services, preferred lenders and local credit unions to offer their expertise on the subject.

The Director and/or Assistant Director prepare an annual statement for the DACC President (that is presented to the DACC Board) that provides updates in all matters concerning student financial aid. A part of this report is dedicated to the Default Management Plan and the current Cohort Default Rate.

This material is presented at the annual Faculty/Staff In-service at the beginning of each fall term.  During the In-service the FA staff emphasizes to faculty the importance of reporting students as withdraws who are not meeting their attendance requirements and to do so in a timely manner so that DACC is in compliance with the Return of Title IV regulations as well as the DL program concerning minimum enrollment requirements.

DACC fiscal years Cohort Default Rates have improved, from this we know that the initiative taken has helped improve the situation. The reality is that DACC does not have the power to eliminate all defaults. DACC staff will remain diligent in monitoring and accessing the process and procedures in DL management to continue to improve the situation.

• 100% verification is performed on all FA files
• Students must use the Request for a Stafford Loan form before loan eligibility is reviewed
• Loan eligibility is reviewed and if warranted loan certification denied or reduced on a case-by-case basis with supporting documentation filed
• Students are counseled extensively with emphases made to alternative resource (scholarships, payment plans) options  before Stafford is certified
• All  FIRST TIME BORROWERS  must perform Entrance Counseling prior to a loan being certified
• All disbursements are held 30 days past the start of the semester
• All student's enrollment will be verified prior to the release of the loan proceeds
• All students must perform Exit Counseling upon graduation, transfer, dropping below half-time enrollment or total withdrawal of courses
• Students who drop a class are sent a notice regarding enrollment requirements in regards to the DL  program and SAP
• Students who withdraw from all course work are immediately sent Exit Material and notice to attend Exit counseling session. SAP notice is also sent at this time
• All borrowers (current & past) are monitored for attendance using the National Student Loan Clearinghouse (reporting every 30 days)
• Graduates are monitored using the Intent to Graduate database and Exit Counseling information provided
• The ISAC DAAR report is used to sent student a notice as received and revisited for follow up for action taken by student after receiving notice
• All new students attend New Student Orientation class that contains consumer information as well as DL overview
• FAO staff work closely with data providers to NSLDS to assure the accuracy of data and initiate updates as needed
      well as the students
• FAO works closely with DACC Foundation to assure funds are available in the form of scholarships and to be sure their Board and the community is aware of  the need of DACC students
• FAO works closely with the President, Office of Instruction and VP of Student Services so that there is a campus wide “buy in” of the DMP and full understanding of the consequences of loan defaults.