Feds Kick Off Loan Counseling Experiment On Select College Campuses

"Despite the tens of thousands of dollars college students are allowed to borrow, debt that can define their financial lives for years, schools are obligated to provide only two counseling sessions before graduation. An experimental program, however, is giving a select group of colleges the chance to beef up advising and keep students from making costly mistakes," The Washington Post reports.

"Fifty-one colleges and universities are participating in a pilot program to test the effectiveness of adding more counseling sessions and using a variety of tools to help students manage their debt, the Education Department announced Thursday. Schools can employ the counseling services of outside groups, develop their own platforms or use the department’s loan counseling tools. ...

Nearly three-quarters of the schools selected for the pilot program are public two-year institutions, while 14 are public four-year colleges. New York University is the only private nonprofit school and Monroe College is the only for-profit institution to make the cut. Half of the 100,000 participating students at each institution will receive additional counseling, while the rest will be offered only the standard entrance and exit advising.

Education officials plan to run the experiment for several years, collecting and evaluating data on borrower outcomes to determine what works best. The federal agency is looking for approaches that improve students’ decision-making about borrowing, have an impact on completion, and promote the successful repayment of loans, including reducing delinquencies and defaults. ...

'Schools need the authority to make data-driven decisions to help specific cohorts of borrowers on campus,' said Justin Draeger, president of the National Association of Student Financial Aid Administrators, a chief proponent of loan limits. 'Without the authority to limit borrowing in specific circumstances, like only allowing part-time students to borrow at part-time rates, schools will never be in a position to fully constrain the continued growth in student loan indebtedness.'"

NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 12/16/2016


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