How Financial Aid Offices Can Promote Responsible Borrowing
Financial aid administrators in California outline the steps they’ve taken to increase responsible borrowing on their campus in a report released today by The Institute for College Access and Success (TICAS) and the California Community College Student Financial Aid Administrators Association (CCCSFAAA).
The report, Making Loans Work: How Community Colleges Support Responsible Student Borrowing, also describes the challenge colleges face because they have to balance access to loans with preventing irresponsible borrowing.
“On the one hand, as an entitlement program, federal loans are available to students who meet basic eligibility criteria,” the report states. “On the other hand, the government expects accountability from colleges whose students borrow. However, choosing to exit the federal loan program can undermine the college completion goals that so many states and colleges are establishing.”
The report draws on interviews with financial aid administrators at a diverse group of California community colleges to identify best practices for promoting responsible borrowing and access to financial aid.
Some schools add steps to the loan process to provide additional guidance and education for students. Others use technology to track at-risk students and improve communication.
Santa Rosa Junior College provides worksheets to help students plan and budget for college. The worksheets serve as a good substitute for in-person counseling, particularly for schools with limited staff and resources. The worksheets may also help the financial aid office identify students that need added attention.
Santa Barbara City College ensures that every borrower receives in-person counseling every year they borrow. The counseling session covers academic progress, borrowing history, budgeting and plans for repayment.
Long Beach City College and City College of San Francisco bridge the gap between financial aid and academics by bringing academic counselors into the financial aid office.
At Antelope Valley College, students nearing 70 units must see a counselor and explain their plans for completing college or transferring. Mendocino College has a similar protocol.
Many schools are harnessing technology to establish early warning systems to identify students at-risk of failing or defaulting and improve communication with students.
“While colleges are required to suspend financial aid for students who are not meeting SAP standards, there is nothing to stop them from offering help to students who are in danger of reaching that point,” the report states. “Automated systems help flag students who may be in danger of borrowing too much or defaulting on their loans and ensure that they get help to stay on track.”
The report also outlines the challenges associated with these initiatives.
“There are many facets to running a responsible loan program. It entails having sound procedures that are clearly communicated and consistently implemented,” the report states. “It also requires that states and colleges invest in financial aid staff and other resources. Those resources should include professional development to ensure staff are up-to-date on regulations and practices while using their time (and students’ time) efficiently.”
The report provides the U.S. Department of Education with recommendations to help prevent default and over-borrowing. TICAS and CCCSFAAA encourage ED to:
- Review the benefits of prorating federal student loans by attendance status using NSLDS and other available data.
- Assist schools in locating borrowers after they leave college to assist with default prevention efforts.
- Include financial aid applicants’ aid histories on the summary form colleges receive after students submit the FAFSA.
- Create an information clearinghouse, or up-to-date information on borrowing, for students.
- Consistently communicate best practices and effective initiatives to colleges.
- Better funding for the administration of financial aid.