UTPA honored for reducing student loan default rate
Posted: 07/30/2003
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Student loan borrowers at The University of Texas-Pan American who have missed payments on their loans should not be surprised when they receive a phone call or letter from the Office of Student Financial Services reminding them its time to start paying back. This is one of the many strategies adopted by the University over the past 10 years that has helped significantly reduce its student loan default rate.

Pictured left is UTPA President Dr. Miguel A. Nevárez, Kristina Chavez, default prevention officer; Michelle Alvarado, director of Student Financial Services; Milt Wright, TG president and CEO; Elias Ozuna, assistant director for Student Financial Services; and James R. Langabeer, vice president for Business Affairs and TG board member.
The efforts to reduce the student loan default rate from 20.9 percent in 1992 to a projected low for the cohort year 2002 of 1.7 percent - well below the Texas and national averages - garnered UTPA kudos from Texas Guaranteed (TG), which honored the University Monday, July 28 at the International Trade and Technology Building, as a national model for other universities.

"UTPA saw that unless they dealt with it (student loan default rate), they were endangering their eligibility to participate in the loan programs, which are so important to helping students at UT Pan American finance their education," said TG President and CEO Milt Wright."The efforts undertaken by the University to get the default rate down was a 10-year effort that required a great deal of work from a lot of different participants, so we are pleased to celebrate that success today."

TG (formerly Texas Guaranteed Student Loan Corporation) is a public, nonprofit corporation that administers the Federal Family Education Loan Program (FFELP), a federally sponsored program providing low-interest loans to students.

UTPA President Dr. Miguel A. Nevárez applauded the work Student Financial Services has done in developing and implementing the strategies that resulted in the University increasing their communication with lenders and servicers, and the efforts to contact delinquent students early on.

"It was very important for us to get our default rate to acceptable levels because if it kept going the way it was going, it would have hit a 25 percent default rate that would have jeopardized the entire loan program for our students," Nevárez said.

Nevárez said if the default rate had climbed to 25 percent for three consecutive years, the UTPA loan program - which includes Federal Stafford loans and the Pell Grant - would have been eliminated by the federal government.

According to Student Financial Services, 50 percent of UTPA students receive the Pell Grant.

Nevárez said UTPA received $65 million in financial aid this year, including student loans, grants, work-study and scholarships.

During the presentation - which was attended by bankers, lenders, Congressman Rubén Hinojosa and University administrators - Wright commended UTPA with an award and also announced the inclusion of UTPA's default prevention strategies as a case study in TG's recent publication, "A Clear and Present Danger to Institutional and Student Success."

Prepared by the UTPA Student Financial Services, the case study showcases the strategic enrollment management and default prevention measures taken to drastically reduce the default rate. Wright said the publication would be used as a training model by colleges and universities across the nation.

"The importance of today is that as we try and educate more young folks in finance and support, we want to make sure we put together a model that allows them to finance their education without the fear of default or concern of default because there are ways to avoid that," Wright said.

Kristina Chavez, UTPA default prevention officer, in charge of targeting delinquent students and getting them set on the right road to repaying their loans back, was a co-author on the case study.

"UT Pan American is proud the case study was used in the publication and we hope this will cause other schools to adopt similar methods to lower their default rate," Chavez said.

Chavez said the case study revealed that UTPA freshmen had the largest default rate and also students who defaulted were not meeting satisfactory academic progress at the time and left the University.

"We found that students who are delinquent on their student loans are appreciative of the effort we make in contacting and informing them of options they have if they are not able to make their monthly payment," Chavez said.

Chavez said 20 percent of UTPA students receive loans, while 87 percent have some other type of financial aid such as grants and scholarships.

"When you consider the fact that UTPA is serving mainly first generation college students and is located in an area with high poverty and unemployment, to achieve a default rate that is among the lowest in the state and maybe even the nation, obviously says a lot about our whole program in enrollment management and student success," Nevárez said.