How Financial Literacy Programs Control Student Debt
"While [financial literacy] programs stress that borrowing to get a college degree can be a wise investment that pays off big in lifetime earnings, one of their other top aims is reducing the student loan default rate," University Business reports. "Many higher ed leaders are realizing that the best way to wrangle runaway student loan debt is to make sure students master the basics of money management. Their institutions have implemented comprehensive financial literacy programs that encompass not just managing loans and paying for college but also topics like budgets, credit cards, 401(k)s, and payroll taxes. To some degree, institutions are rolling out these programs by necessity. The Higher Education Act of 1965 requires colleges to provide entrance and exit counseling to students receiving federal loans, to review such information as the terms of the loan and repayment plans. Some institutions also offer general debt management advice in those counseling sessions, as financial aid and college planning author Mark Kantrowitz notes on his website FinAid.org. And some financial literacy advocates would like to see a stronger push from the federal government. 'We at ASA are in favor of using the upcoming reauthorization of the Higher Education Act to encourage financial education counseling to student borrowers through financial aid offices, employers or nonprofits,' says Allesandra Lanza, director of corporate public relations for American Student Assistance. ... Many college students don’t know what they don’t know about money, experts say, and they can benefit greatly from the direction and focus that a formal financial literacy curriculum provides. 'They know they need help, but they can’t articulate the exact need,' says Alisa Wilke, director of product development at ASA. 'They really want someone to hold their hand and give them the next steps.'"
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