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market, but they will not necessarily make borrowers willing to repay loans. More likely, there are personal characteristics -- like persistence, motivation, intelligence, conscientiousness and discipline -- that contribute both to the borrower’s success in college and to the borrower’s propensity to repay his or her loans after college. Interestingly, we can be fairly sure that these personal factors do not derive from the borrower’s background characteristics; since if they did, the background variables would likely have as strong a relationship to default as the performance variables. That they have weak relationships suggests that characteristics like persistence, if they are the real casual factors here, largely transcend ethnicity and socio-economic status, at least as those background characteristics are captured within the context of this single-institution study.

To the extent that success in college is an outgrowth of the personal qualities of the student, directly promoting college success might largely be beyond the reach of administrative strategies. In many cases, it might be too late for administrators and educators to inculcate discipline and motivation in students who did not have those traits when they arrived on campus. Perhaps the most administrators will be able to do is to create a supportive environment that encourages the expression of the students’ best qualities when those qualities are already present. Certainly, retention and persistence strategies should seek to bind the student to campus life, create effective support services and remove barriers -- financial and otherwise -- that discourage students from completing their educational journeys.

Aside from the study’s support of retention and persistence strategies, the most tangible benefits of the study might be the identification of some early indicators of future default trouble, around which administrators can build intervention strategies. For example, the default rate of borrowers with grade point averages of 2.0 or less is around 18 percent, while the default rate of all other borrowers is 2.6 percent. Therefore, financial aid administrators could direct supplemental loan counseling to borrowers as soon as their GPAs fall below a certain level. Such counseling could emphasize the importance of satisfactory academic progress in maintaining eligibility for federal financial aid.

(Incidentally, the study shows that in-person exit counseling is strongly related to default behavior. Borrowers who receive exit counseling through in-person contact with counselors have a 1.3 percent default rate, while borrowers who do not receive in-person counseling have an 11.1 percent default rate. However, in-person exit counseling might owe much of its association with default to the fact that it is so strongly correlated with graduation status. Nearly everyone who graduates receives in-person exit counseling, but few borrowers who fail to graduate receive it.)

Borrowers who fail courses might also be another target for aid personnel. The study shows that a borrower who never fails a course has a default rate of 1.4 percent. But borrowers who fail more than one credit-hour have a default rate of 8.6 percent. Therefore, university administrators could use course failure as a trigger for intervention with regard to a borrower’s student loans.

This research further suggests that borrowers who do not graduate are at a much greater risk of default than borrowers who graduate. Graduating borrowers have a default rate of only 1.8 percent, compared to a rate of 13.7 percent for borrowers who do not graduate. Therefore, withdrawing or terminated student borrowers are a possible target group for expedited exit counseling and other outreach programs.

Particular academic majors and university colleges also have higher than average default rates. Administrators might be able to leverage this information to focus counseling efforts when student borrowers chose a major or attend a college for the first time. Or financial aid personnel


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