NASFAA President Justin Draeger issued the following statement in response to Critical Choices: How Colleges Can Help Students and Families Make Better Decisions about Private Loans, a report from the Project on Student Debt at The Institute for College Access & Success (TICAS).
"NASFAA members embrace the responsibility to help borrowers stay within the safety of the federal student loan programs whenever possible. As demonstrated in the TICAS report, many schools have implemented innovative ways to keep borrowers informed of their loan options. However, two large obstacles must be overcome before we can be sure that all students have adequate information that will lead them to exhaust federal student loans before turning to costlier private loans.
"First, all lenders should be required to receive school certification before disbursing a loan so that schools will know who is borrowing to provide adequate intervention and counseling. Until there is a streamlined method for schools to track all private education loan borrowing, schools will be wasting valuable resources attempting to track down private education loan borrowers that could otherwise be spent counseling students.
"Second, schools must be given adequate resources from the institution to provide counseling and other key services to students. In a 2011 Survey of nearly 700 colleges and universities, NASFAA found that students attending institutions from all sectors of higher education are receiving diminished student services due to a combination of increased administrative burden and stagnant or even reduced financial aid operating resources. These patterns are exacerbated by the fact that both the amount of aid disbursed and the number of aid applicants have increased greatly over the past five years. Nearly 90 percent indicated that the resource shortage impacted their obligation to assist and counsel students, especially in the form of face-to-face counseling and attention to target populations.
"NASFAA looks forward to partnering with student and consumer advocates, the Consumer Financial Protection Bureau, and loan providers to ensure students have all of the information they need to make smart borrowing decisions. We are pleased that the TICAS report will be presented to the NASFAA membership at our national conference in Boston so we can continue an open dialogue on best practices in student counseling and disclosure."
Publication Date: 7/13/2011