"Yesterday, the US Department of Education announced a new experimental initiative that would give a select group of institutions the ability to require additional loan counseling for borrowers before they receive a student loan," New America's EdCentral reports.
"This opportunity, which the Department announced on the last day of the National Association of Financial Aid Administrators’ (NASFAA) annual conference, will likely be of interest to many institutions that feel that their hands were tied by 2015 guidance from the Department reminding them that they could not require additional loan counseling. For those who are selected to participate in the experiment, the leeway to require additional counseling will give administrators an extra tool to help students manage their debts. But for everyone else, confusion about the tools financial aid administrators do--or do not--have to help borrowers make more informed decisions has resulted in some frustration. As a result, frustrated financial aid administrators have been pushing Congress to give schools the authority to directly control student borrowing.
Loans are an important entitlement that provide access for those who would not otherwise be able to afford college. Therefore, students are able to borrow the full amount of aid for which they are eligible, and it is intentionally very hard for schools to deny or reduce a student’s loan award. But unlike other federal entitlements including grant aid, there are risks to the student of taking on too much debt. There are also risks to the institution. If too many students default on their debt, the institution can lose access to all federal financial aid. For these reasons, schools are interested in helping ensure that students are borrowing what they need and no more and, critically, no less."
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Publication Date: 7/15/2016