UT Pan American was the only university in Texas to be so recognized.
"The progress made in the reduction of the default rate over the past three years has been a major accomplishment for the Student Financial Aid Office," said James R. Langabeer, vice president for business affairs. "The default prevention analysis and the subsequent rate reduction plan that has been implemented over a three-year period have each year dramatically reduced the default rate. Arnold Trejo (director of financial aid at UT Pan American) and his office staff deserve this outstanding national recognition."
The Financial Aid Office's default prevention program was prompted by a considerable jump in the institutional cohort default rate — the number of people who defaulted on student loans that they took out through UT Pan American as calculated by the U.S. Department of Education — from 14.5 percent in 1991 to 20.9 percent in 1992. Because the defaults are recorded over a two-year period, the 1992 figures were reported to the university in 1994.
Trejo said the national attention from the award is an honor, but "the important thing is that we have brought the cohort default rate down from 20.9 percent to 12.9 percent, a reduction of eight percentage points."
"In fiscal year 1992, we had what our institution considered a high cohort default rate, which was not going to be acceptable, so we rose to the occasion and implemented various strategies, and we reversed that trend," he said.
"The Sallie Mae award brings national recognition to UT Pan American, and we're certainly very excited about that — we were selected from a very competitive group and went through a rigorous application process. We were one of 10 institutions selected, and when you consider that there are more than 3,000 institutions of higher education in the country, that certainly is an honor, but the important thing is that the university managed to turn a problem into a positive.
"We're not done yet," Trejo said. "We're going to continue to implement strategies to reduce the 12.9 percent default rate.
"We're probably one of the few student aid offices in the country that has a full-time default prevention officer," he said. "That has been the key to UT Pan American turning this problem around. I think we're a trendsetter in this area. We were one of the first to say we needed a full-time, professional, degreed person monitoring trends and statistics, doing benchmarking of servicers. The default prevention officer on this campus is a weather forecaster to see what's ahead. Rather than reacting after the default rate has gone through the roof, we like to be proactive.
Trejo said the Financial Aid Office's success in combatting the default rate has sparked interest from other institutions.
"We're being sought after by organizations in other states — New Jersey, Arkansas, South Dakota, Minnesota and others — and by schools within our own state, wanting to know what our strategy was and how we managed to turn our default rate around."
As part of the Sallie Mae Education Institute's award, the Financial Aid Office will receive $5,000 with the stipulation that at least 75 percent be used for need-based grants or to pay down the balances of educational loans of selected students and up to 25 percent be used to fund debt counseling, pay for financial aid training or support other student aid office expenditures.
In his letter notifying Trejo of the award, John R. Reeves, president of the Sallie Mae Education Institute, noted that selection for the award, designed to recognize innovative efforts to improve financial aid service to students, was based on evaluations provided by the university's peers.
Other 1997-98 award recipients included financial aid initiatives at Bloomsburg University in Pennsylvania, Dr. William M. Scholl College of Podiatric Medicine in Chicago, New York University, Northeastern Ohio Universities College of Medicine, Saint Louis University in St. Louis, Mo., the University of Arkansas, the University of Miami in Coral Gables, Fla., the University of Southern Colorado, and the University of South Florida.
Given honorable mentions were programs at Brigham Young University, Columbia University's School of Nursing, Milwaukee School of Engineering, Western Illinois University and a second program at the University of Miami.