Do current restrictions on loan counseling put a damper on your creativity and effectiveness? You have an opportunity to take more control over counseling, but you must act quickly. The Department of Education (ED) has extended for several more days the priority deadline to indicate an interest in a loan counseling experiment that would afford participants flexibility to require additional and customized Direct Loan counseling.
This experiment could demonstrate a recommendation that NASFAA advocates, in giving schools more authority to increase the effectiveness of loan counseling. At this stage, ED is asking for letters of interest, but needs more schools, especially non-profits and four-year public institutions, to indicate an interest in order to proceed with developing the experiment. ED will invite interested schools to participate as an experimental site based on information specified in the Federal Register Notice.
In proposing this experiment, ED acknowledged that “there is limited research on the effectiveness of loan counseling, including which types of content and modes of delivery of loan counseling are most effective in helping students to understand and manage their debt, as well as when and how often counseling should occur to be most effective.” Through this experiment, ED said it hopes to learn whether the additional loan counseling:
ED is also seeking to learn whether different types of content and modes of delivery of loan counseling are more or less effective in promoting the above outcomes.
While ED said it intends to consult with selected institutions on the final design of the experiment, the initial conditions and requirements of the experiment are detailed in the original Federal Register solicitation. Participants can provide the extra counseling through ED’s Financial Awareness Counseling Tool (FACT), a third-party counseling product or third-party servicer, or institutionally-developed alternative counseling. Additional counseling may include a test or other evaluation with certain caveats regarding accessibility, as long as it does not impede a student’s ability to borrow a Direct Loan.
Institutions participating in this experiment will track and provide data to ED for students selected for additional counseling, as well as a control group. Additional counseling will be limited to once per year, so students who have already received initial counseling under current requirements would not be provided with additional counseling until the next year. Students selected to receive additional counseling will not be able to receive their Direct Loan until completion of that counseling.
Institutions wishing to apply for participation in the experiment should send an email to firstname.lastname@example.org, following the instructions for submitting letters of
interest under the “supplementary information” section in the introductory part of the Federal Register Notice.
Publication Date: 10/4/2016