UNCF-member historically black colleges and universities (HBCUs) made significant progress in reducing student loan defaults rates, according to FY 2013 Cohort Default Rate data released last week. Two-thirds of the 37 HBCUs supported by UNCF reduced their FY 2013 Cohort Default Rates (CDRs) compared to the prior year, and some institutions cut default rates by 40 percent or more over the last two years.
“UNCF-member institutions have devoted tremendous time, resources and effort to reduce student loan defaults, all while using scarce funds to do their part, and these efforts are paying off,” said Dr. Michael L. Lomax, UNCF president and CEO. “Now, federal policymakers must step up to the plate to provide debt relief and better student loan services to the 80 percent of HBCU students who must borrow to get to and through college.”
Notably, all 101 eligible HBCUs produced three-year CDRs that fall below the 30 percent regulatory threshold. HBCUs were recognizedby the Education Department for innovative approaches toward default management and reduction, including best practices such as tracking measureable goals, engaging students at orientation with borrower topics, enhanced entrance and exit counseling, increased contact with delinquent borrowers and borrower tracking.
For additional progress on student loan debt, delinquencies and defaults, UNCF recommends that federal policymakers:
- Reduce the need for low-income students to borrow by increasing grant and work-study opportunities
- Make federal student loans less costly for students and their parents
- Hold federal student loan servicing contractors accountable for serving students at a high level
- Establish a single, simple and automatic income-based repayment plan for all federal student loan borrowers