Your Thoughts: The Ideal Version Of Loan Counseling Would Look Like…

With the reauthorization of the Higher Education Act fast approaching, new loan counseling requirements have been at the forefront of many discussions. Sen. Tom Harkin's (D-IA) discussion draft of the Higher Education Affordability Act (HEAA) bill, in particular, seeks to improve loan servicing and introduces new counseling requirements. We want to hear from you! Share with your colleagues in the comments section below the way you think student loan counseling should be structured and scroll through to see what other NASFAA members have to say.

 

Publication Date: 8/11/2014


Gary S | 8/12/2014 11:44:12 AM

5. All of these services should be provided by the Department of Education with follow-up services provided free of charge by the TIVA contractors. We need to eliminate the high cost after market servicing activities. Some of these are provided by current TIVA subsidiaries which is a travesty. The TIVA's should be obligated to provide a high enough level of servicing effort to eliminate the need for the after market activity.

Gary S | 8/12/2014 11:40:17 AM

Couple of thoughts from an online perspective that can apply to all borrowers.
1. Entrance Interview should be interactive, high quality and linked to first loan disbursement authorization. Borrowers should be challenged to answer detailed questions to satisfy that they understand the loan obligation that they are creating. This should include providing them automated projections over 4 and 5 years of identical borrowing (or escalated borrowing if they borrow the limits in year one) to set expectations.
2. I can be in favor of an annual counseling event that is automated and challenges their understanding of the debt and resulting repayments required. It should also be tied to COD for the purpose of releasing or holding the disbursement by the school. The idea here is to not add administrative burden at the school level other than follow-up with the student and/or providing them direction to follow the required activity.
3. The Exit Interview should be regulated as a graduation requirement (not optional at the school's discretion). The Exit process should again be online and automated with daily reports available to the schools via daily email or a at a frequency of the school's choosing. (e.g. weekly or monthly until the last two week's prior to graduation ceremony). The Exit should automatically populate all their outstanding debt from NSLDS and show how payments would work using each of the various repayment options. The student would also select their repayment option at this time and be provided their servicer contact information.
4. This routine should also include optional Financial Literacy modules at each stage. The Entrance stage might incorporate a required Financial Literacy module that makes sense.
5. All of these services should be provided by the Department of Education with follow-up services provided free of charge by the TIVA contractors. We need to eliminate the high cost after market servicing activities. Some of these are prov

Amy C | 8/12/2014 10:57:19 AM

Having students do something every year that they're already not paying attention to seems like more administrative burden without enough gain to make it worthwhile. I think doing the counseling at entrance and exit are the right times, but students need to get more out of it. It might mean more time for the financial aid office, but requiring in person sessions with incoming students at the beginning of the year, maybe included with orientation events would probably be the most effective for entrance counseling and in person sessions for exit counseling, too. That way if someone is not paying attention, you can call them out. For distance programs, I'm not sure - maybe some type of essay or fill-in the blank component and something to make sure it's the student actually doing it, not a parent or friend.

Mary M | 8/11/2014 3:51:03 PM

Entrance Counseling should be renamed, "Take Charge of Your Life - Take Charge of Your Student Loans." We have an adult population at our school and still so many students choose to remain clueless about the ramifications of taking out student loan and especially about out taking out more loan than what is required to pay their tuition and fees. By using the term "clueless," I am referring to students who rush through the financial aid process (and in many cases let their spouses or parents do if for them) and then are dumbfounded when their loans go into repayment because they can't believe they have gone so far in debt. Please require entrance counseling for every new financial aid award year. Students need much more elbow nudging about student loan debt.

Linnea T | 8/11/2014 2:15:02 PM

Can loan counseling also include a hand-print or retina scan so that parents aren't completing these documents on behalf of their students???

Corinne S | 8/11/2014 1:47:02 PM

Ideally, there would be video. I would like to see video and text incorporated into federal entrance counseling, and for the questions not to be at the bottom of the page, but a separate page all together which cannot be returned to without refreshing new questions on the "test" page. The idea would be to promote comprehension, not word search. I'd also like for the main take away messages to be, "Always contact your Loan Servicer." and "Borrow Responsibly". Finally, I believe that Entrance Counseling should be required every year, and would go so far as to say it should be required prior to every disbursement.

Thomas S | 8/11/2014 10:17:39 AM

Counseling needs to be interactive and check for comprehension. And provide resources for students who fail the comprehension part. They will not read the material, if they think they can just search it for words to get the answers. So any check for comprehension needs to use language that is not a perfect match, but means the same thing as the information.

Also, any counseling needs to state clearly and often, that not all loans are Direct loans and that they need to be checking all their loans for counseling requirements. To often students are told by Direct loans that the information they received is for "all of their student loans", yet the student has Perkins loans, Health Profession Loans, Institutional Loans and possibly other private loans. The students then ignore the others and think all is well, until a collector calls.

Elena O | 8/11/2014 10:12:54 AM

As a default prevention person, the languare should be on the level for a student to comprehend, questions should be at the end of the session, deferments, payment, plans and forbearances should be explained in more detailed and a pdf should be available for a student to download. Student's complete these sessions in 5 to 10 minutes or until they get the correct response. If you ask them, what was reviewed, they do not know and/or understand what they read. Many do not care as long as the funds or disbursed to them. If the student does not understand the implications of the loan counsleing, perhaps, the funds should be immediately disbursed to them. There should be additional action on the student's part or the financial aid office.

Lisa H | 8/11/2014 10:12:00 AM

Suggest requiring set up of electronic account with servicer up front so continuous contact and information can be shared. Also require contact information that includes social media and that requires updates the beginning of each term. Financial awareness counseling with budgeting exercise, predictive earnings and loan payment calculators all as part of the requirements before loans can be disbursed.

Judy H | 8/11/2014 9:57:56 AM

I'm in default prevention and I think that default language should be simplified and place more importance on paying loans back and what can happen if a student defaults. I find that many students just skip this part.

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