Study Explores Effectiveness Of Current Practices On Entrance Counseling

By Charlotte Etier, NASFAA Research Analyst 

A report released yesterday by TG, in collaboration with NASFAA, finds first-time borrowers are learning little about budgeting and responsible borrowing when completing loan entrance counseling. “It’s a life-altering decision being made with minimal information at a time of maximum distraction,” said Jeff Webster, TG’s assistant vice president of research told The New York Times in a pre-report release article last week

"When students first enroll they have multiple competing priorities vying for their attention," NASFAA President Justin Draeger agreed. “TG’s research backs up what aid administrators have anecdotally been sharing for years: that too much information, at the wrong time, is like giving no information at all.”

Data for the study, “A Time for Every Purpose: Understanding and Improving the Student Experience with Online Student Loan Entrance Counseling,” was collected via 36 User Experience (UX) testing sessions, which were conducted with individual borrowers fulfilling their entrance counseling requirements using an online module, across seven institutions. Based on an analysis of these UX sessions researchers were able to conclude most students begin counseling eager to learn more about how to finance their education and control their borrowing, but they tend to shift from reading the material slowly and carefully to skimming and skipping as they progress. Three main factors contribute to this pattern: 

  1. At the beginning of the semester, first-time borrowers are short on time and focus; 
  2. They find much of the material unhelpful and irrelevant to their circumstances; 
  3. They struggle to comprehend both the content of the material and the navigation of the module.

Many of these findings are consistent with TG’s previous report, “From Passive to Proactive: Understanding and Improving the Borrower Experience with Online Student Loan Exit Counseling,” released in February which focused on loan exit counseling. Based on these findings, TG developed the following series of recommendations for higher education practitioners and policymakers as well as for the design of more effective entrance counseling materials. 

Recommendations for Practitioners:

  • Deliver supplemental counseling, ideally in a face-to-face setting, in order to help answer questions
  • Provide sample budget sheets using local cost-of-living expenses
  • Establish a system for numerous disbursements with opportunities to return unused funds

Recommendations for Policymakers (Revise counseling statutes through the reauthorization of the Higher Education Act of 1965 to):

  • Give colleges and universities greater discretion to require supplemental counseling
  • Invest in additional counseling and training at secondary and postsecondary schools
  • Provide the Department of Education more flexibility to design a better informed experience
  • Require and invest in supplemental counseling methods

Recommendations for Entrance Counseling Designers:

  • Reorder topics to promote movement toward actionable advice
  • Employ a simple, conversational tone and vocabulary
  • Lower the word density, word count, and required time through formatting, editing, and multimedia

Many of these recommendations were in alignment with key objectives for national financial literacy highlighted by Louisa Quittman, director of financial education in the Treasury Department's Office Consumer Policy, at a financial literacy event on Capitol Hill Tuesday. 

“We urge policymakers to consider TG's research when looking for ways to help students better absorb the information that will help them make smart borrowing decisions,” Draeger said.

As previously shared in Today’s News this report, part of a multiphase research project, is the third in a series of reports by TG on student loan counseling in the United States. TG’s research team released the first report on the efficacy of loan exit counseling in February, and second report “Informed or Overwhelmed? A Legislative History of Student Loan Counseling with a Literature Review on the Efficacy of Loan Counseling” in March. Remaining topics include: a study of the promising practices in financial literacy training and student loan counseling currently employed at schools whose student loan borrowers outperform expectations. A final paper will synthesize the findings and implications of the four studies and offer broader conclusions on the policy and practice of student loan counseling. 

NASFAA will continue to share these studies in Today’s News as they are released throughout 2015.

 

Publication Date: 5/1/2015


Debra B | 5/1/2015 1:31:11 PM

Thank you, thank you, thank you! It's just not right that schools can't require more from students who are taking out loans. Many are the times when I have learned that a student does not even know how much he or she has borrowed. I've seen tears in the office when a student finds they have maxed out on loans and are planning to transfer to a four year college. And many hours of work time have been wasted preparing for and presenting optional loan workshops that have had extremely poor attendance - and I'm talking 3 or 4 students. And what's wrong with an annual refresher anyway? I don't understand the current policies.

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