Mission critical: Four ways to make loan counseling stick with students

Mission critical: Four ways to make loan counseling stick with students

By Rob Davenport, senior writer at TG’s HigherEDGE®

It’s a perennial challenge for schools: how do you deliver loan counseling so that students walk away ready to practice what they’ve learned about repayment. Think of entrance counseling, typically provided at school start when students are scrambling for classes, juggling assignments, and meeting dozens of classmates. The experience can be a recipe for cognitive overload and a barrier to a critical lesson for students — how to manage the debt they’re taking on, perhaps for the first time in their lives. Just one consequence of counseling’s failure could be loan default, which can harm a borrower’s financial well-being and, at high rates, jeopardize a school’s Title IV eligibility.

So, how can you engage students in loan counseling so that they’re more likely to live by what they learn? The key for many schools is to deliver the right message in the right way. Consider the strategies suggested below.

  • Focus on at-risk students: Study your default data, looking for common characteristics among defaulters — for example, a low GPA or part-time status. Offer extra counseling to students who share these characteristics, including in-person sessions tailored to the needs of recipients. This means talking one-on-one with students about their future income, the debt they can expect, and the things they can do now to ensure repayment success, as in budgeting and borrowing responsibly.
  • Mix it up: in-person and online: Keep things varied and you’ll keep your student borrowers’ attention. Most schools rely on the Department of Education’s online loan counseling. Add to this in-person group training that gives students time to ask questions. In the process, you could help them estimate whether future income will cover loan payments. Online debt-to-income calculators can help in this regard. There are some great calculators that get pretty granular, offering estimates based on institution and major.
  • Add in financial literacy concepts: Most students are new to managing money, which makes them vulnerable to overspending and over-borrowing. Consider in-person financial literacy training that emphasizes fundamentals like drafting a realistic budget, distinguishing needs from wants, and establishing long- and short-term financial goals. You’ll find a variety of versatile online calculators as well as phone apps that provide expenses-tracking for students on the go.
  • Offer an exit counseling folder: Better than a note on the fridge or a letter in the mailbox, how about a small portfolio of resources and information that students can take with them when they leave? Say, a folder stocked with vital loan servicer contact information, brochures on income-based repayment plans, and tips on post-college budgeting, for starters.

Help for improving your counseling game

If you’d like a refresher on counseling requirements, refer to the Federal Student Aid Handbook. Your school might also consider hiring a third-party servicer that offers on-site consulting on the best way to prepare borrowers for repayment while they’re still in school. 

This article supported by TG HigherEDGE

Rob Davenport has more than 10 years experience writing on higher education issues, including default management, financial literacy, and college outreach. As a writer for TG’s HigherEDGE Default Management Solutions, he focuses on how schools can build an effective default management program. In particular, he provides advice on enlisting campus support for the default prevention cause, educating students in debt management, and connecting borrowers with the right resources throughout repayment. Rob also works closely with other HigherEDGE staff. HigherEDGE offers a comprehensive default management service designed to help schools take control of default. Among other things, HigherEDGE provides schools with campus consulting, counseling for borrowers as they enter repayment, and outreach to borrowers with delinquent loans. You can contact Rob at (800) 252-9743, ext. 4846, or by email at robert.davenport@tgslc.org.


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