Using Predictive Analytics to Understand Student Loan Defaults

(1)

RP Group Conference

April 8, 2016

Using Predictive Analytics to Understand

Student Loan Defaults

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Ø

 

Background

Ø

 

Purpose of study

Ø

 

Methodology

Ø

 

Results

Ø

 

Current Approach

Ø

 

Future Plans

4/17/16 2

(3)

}

 

Student loans are the primary funding source for many

student expenses

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

Tuition

Housing

Books

Food

Entertainment

Apparel

Expenses for Family

Transportation

_{Two-year public}

Four-year private

Four-year public

(4)

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Financial stress is highest for 2-year public college students

4/17/16 4

National Student Financial Wellness Study (2014), The Ohio State University

(5)

FY 2012 Official National Cohort Default Rates

Fiscal Year 2012 Official

# of Schools

Borrower

Default Rate

(%)

# of Borrowers

Defaulted

# of Borrowers

Entered

Repayment

Public

1,667

11.7%

301,453

2,563,157

Less than 2 yrs

148 12.2%

1,241

10,151

2-3 yrs

854 19.1%

173,628

905,058

(6)

(7)

Ø

 

Identify common characteristics of defaulted students and

apply a predictive statistical model to foresee student loan

defaulters in advance of their default.

Ø

 

Plan proactive student support strategies to reduce the

student loan default rate.

Ø

 

Provide a better understanding of the important connection

between financial aid functions and district-wide services to

better work as a community in this effort.

(8)

4/17/16 8

Discussion

What cross-functional problems are presented by

student loan defaulters? Why would these problems

be relevant to stakeholders beyond the financial aid

department?

(9)

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Recognize that default is a DISTRICT-WIDE issue

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Initiated Parker, Pierson and Associates for support

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The district is highly interested in addressing issues

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Ways to offer proactive support for students before they enter

default

(10)

4/17/16 10

N

=1,017

(11)

Cohort Year

2013: 21.0%

Cohort Year

2014: 14.3%

Combined

(12)

Ø

 

Data Collection

• 1,926 students, two repayment cohorts

• Predictor variables

 

Ø

 

Correlations and Logistic Regression

4/17/16 12

(13)

Demographics - Ethnicity

Delta College

Cohorts

10%

17%

0%

23%

1%

43%

5%

1%

0% 20% 40% 60% 80% 100%

African-American

Asian

American Indian/Alaska Native

White Pacific Islander Hispanic Multi-Ethnicity Unknown

36%

7%

1%

25%

0%

24%

5%

2%

0% 20% 40% 60% 80% 100%

African-American

Asian

American Indian/Alaska Native

White

Pacific Islander

Hispanic

Multi-Ethnicity

(14)

4/17/16 14

Demographics - Age

Delta College

11%

41%

16%

9%

8% 10%

5% 0% 20% 23% 18% 12% 17% 10% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 17 or

Younger 18-24 25-29 30-34 35-39 40-49 50 and over

At First Enrollment At Repayment

Cohorts

32% 34%

13%

7%

4% 6% 4% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 19 or

Younger 20-24 25-29 30-34 35-39 40-49 50 and over

(15)

Demographics - Gender

Males

N

=717

37%

Females

N

=1,178

61%

Unknown

N

=31

2%

Cohorts

Male

N

=10,328

43.0%

Female

N

=13,435

56.0%

Unknown

N

=241

1.0%

(16)

Initial assessment level Most recent declared major Units attempted

Ever at any term:

• Full-time

• 15+ units

• Withdrew from a course

College Engagement Athlete, MESA, DSPS

4/17/16 16

Gender Ethnicity BOG status

Age at enrollment Veteran status

First-generation status Age at repayment

Units completed Cumulative GPA Completion:

•  Degree

•  Certificate

•  Transfer

Dismissal

Default

(17)

Population(s)

Students

Total

defaulted Default rate

Number

Default rate

Overall

point difference

Percentage

Ethnicity

Asian 134 10 7.5% 17.9% -10.4% Black or African American 691 147 21.3% 17.9% +3.4% Hispanic or Latino 465 78 16.8% 17.9% -1.1% White 481 81 16.8% 17.9% -1.0% More than one race 88 19 21.6% 17.9% +3.7%

Gender

Males 717 185 25.8% 17.9% +7.9% Females 1,178 153 13.0% 17.9% -4.9%

Special Populations

First Generation 831 165 19.9% 17.9% +2.0% Individuals with disabilities 278 53 19.1% 17.9% +1.2% Veterans 79 12 15.2% 17.9% -2.7%

All Students

1,926

344 17.9%

(18)

4/17/16 18

Population(s)

Students

Total

defaulted Default rate

Number

Default rate

Overall

point difference

Percentage

Age at First Enrollment

17 and Younger 219 22 6.4% 17.9% -11.5% 18-24 798 122 35.5% 17.9% 17.6% 25-29 304 63 18.3% 17.9% 0.4% 30-34 181 34 9.9% 17.9% -8.0% 35-39 146 26 7.6% 17.9% -10.3% 40-49 184 49 14.2% 17.9% -3.7% 50 and over 94 28 8.1% 17.9% -9.8%

Age at Repayment

18-24 381 57 16.6% 17.9% -1.3% 25-29 446 82 23.8% 17.9% 5.9% 30-34 346 64 18.6% 17.9% 0.7% 35-39 223 20 5.8% 17.9% -12.1% 40-49 336 72 20.9% 17.9% 3.0% 50 and over 194 49 14.2% 17.9% -3.7%

(19)

*List includes programs with more than 10 students in the cohort. Major Highest Default Rate Total Students in Cohort* Agriculture Technology and Sciences 53.8% 13 Physical Education 42.1% 19 Industrial Systems Technology and Maintenance 38.9% 18 Music 36.0% 25 Mass Communications 33.3% 18 Automotive Technology 32.7% 49 Art 27.8% 18 Construction Crafts Technology 26.3% 19 Information Technology 24.6% 61 Child Development/Early Care and Education 23.9% 67 Computer Programming 23.8% 21 General Studies 21.8% 78 Media and Communications 21.4% 14 Undeclared 20.4% 98 Corrections 20.0% 15

Major Lowest Default Rate Total Students in Cohort* Physical Sciences 0.0% 14 Physical Therapist Assistant 0.0% 11 Social Sciences 6.3% 32 Health Education 6.7% 15 Fashion 8.3% 12 Liberal Arts and Sciences 8.3% 24 Registered Nursing 10.4% 96 Administration of Justice 11.5% 61 Accounting 12.3% 57 Health Occupations 12.9% 280 Business and Commerce 14.1% 135 English 14.3% 14 Liberal Studies 15.4% 104 Psychology 15.6% 77 Engineering 16.7% 24

(20)

4/17/16 20

Enrollment Defaulters Defaulters Difference Non  Avg. Units Attempted 51.8 80.6 -28.8

Avg. Units Completed 29.1 53.3 -24.3

Full-time (any semester) 77.3% 89.3% -11.9%

15+ Units (any semester) 24.7% 41.4% -16.7%

Ever Withdrew from a

Course 82.6% 86.3% -3.8%

Dismissal (Academic or

Progress) 5.2% 1.9% 3.3%

Unduplicated Count 344 1582 College Engagement/

Affinity Groups Default Rate Students Total Athletes 18.7% 75

MESA 0% 8

DSPS 19.1% 278

Unduplicated Count 344 1582

---0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

1 2 3 4 5 6

De fa ul t R ate Assessment Level

Initial Assessment

(21)

7.8%

3.2% 5.8%

12.5% 30.4%

15.4%

23.3%

30.3%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Award Certificate Degree Transfer

Completion

Default Non-Default

Defaulters

Non

 

Difference

Average Cumulative GPA

1.6

2.3 -0.7

(22)

4/17/16 ₂₂

Academic History

Correlation

Initial Math Assessment

-.09*

Initial Reading Assessment

-.09**

Initial Writing Assessment

-.10**

Level 1 Any Assessment

.12**

Units Attempted (over 60)

-.22**

Ever Full-time

-.14**

Ever 15+ units

-.13**

Demographics

Correlation

Gender (Female=1)

-.16**

Asian

-.06*

Black/ African American

.07**

Age at Enrollment

.08**

First-Gen

.05*

Outcomes

Award

-.20**

Degree

-.17**

Certificate

-.14**

Units completed

-.24**

Cumulative GPA

-.28**

GPA >2.0

-.25**

Transfer

-.15**

Completed

-.22**

Dismissed

.08**

Note: *p<.05, **p<.001;

Effect Size: <.10=small, .11-.24= medium, >.25= large

Default Default

Pr ed ic to r Variab le Pr ed ic to r Variab le

(23)

Indicator

Coefficient

Std. Error

Odds when

X is low

Odds when

X is High

Odds Ratio

Change in

Female

-0.793 *** .128

.268

.121

-10.3%

Assessment Level 1

.344 * .141

.148

.185

4.1%

Cumulative GPA >2.0

0.699 *** .161

.251

.125

-10.0%

Units Attempted >60

-.377 * .161

.202

.139

-4.6%

Did not complete

.808 *** .166

.101

.227

9.3%

Constant

-1.360

Chi-Square Log

Likelihood

216.57 Pseudo R Square

.177

(24)

4/17/16 24

are male (10.3%)

assess at level 1 in any subject (4.1%)

attempt fewer than 60 units (4.6%)

earn below a 2.0 cumulative GPA (10.0%)

(25)

Reactively we offer:

Ø

 

Monthly Mailers

ü

 

Repayment Info

ü

 

Deferment Forms

ü

 

Forbearance Forms

Ø

 

I-3

ü

 

Ion Tuition Dashboard

ü

 

Monthly Emails

ü

 

Phone Calls

Proactively we can offer:

Ø

 

E-Course

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Loan Entrance

Counseling

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Exit Counseling

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Targeted Populations

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Monthly Enrollment

Management

Committee Discussions

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Financial Literacy

Program

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4/17/16 26

Ø

 

Partnering with programs and faculty throughout the district

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Financial Literacy Workshops

• Simple Budgeting

• Banking Basics

• Understanding Credit History

• Borrowing with Credit Cards & Loans

• Financial Aid 101

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Align Financial Aid Workshops with New Student Group

Advising/Orientation

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Financial Literacy Website

(27)

Ø

 

Student success and retention are predictive of default

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Future additional variables – Parental Education, High School,

Debt Burden, Educational Attainment, Family Structure

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Dissemination of results to campus constituents

 

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Utilize results to inform College action plans

 

(Student Equity Plan, Student Success and Support Plan, etc.)

 

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Institutions have a shared responsibility to educate, empower,

(28)

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What additional variables could contribute to student loan

default?

 

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What are your colleges’ reactive and proactive default

prevention strategies, and how can you use this type of data

to better inform your efforts?

(29)