Reducing student loan default rates has become a primary concern of the higher education industry, which has been under the country’s magnifying glass. With rising rates of default, colleges and universities have both the motivation and the duty to help their students succeed not only during the college years, but after, when it’s time to pay back the financial aid that made school possible. Intentionally campaign for financial literacy and against student loan default to help your students stick to payment schedules and succeed over the long haul, thereby reducing your school’s default rate.
Some schools have well-developed financial literacy programs. Others require financial literacy classes for their students, like Utah’s Required Financial Literacy Course. These cover the basics of decision-making and income, career and savings, consumer safeguards and risk management.
If your college doesn’t provide such classes and you know they are not available at local high schools either, your Financial Aid Department can step in with a high school outreach program of your own. Be sure to link the teachings specifically to paying off college debt after graduation, and give statistics about student loan default, as well as tips for avoiding it. Our blog, 4 Tips to Build a Solid High School Outreach Program, will help you get started immediately.
Most modern students are totally plugged in, so apps are a great way to reach them. Create your own, or your financial aid office can hold demonstrations about using some of the best apps out there. Try Mint, which covers general finances (loans included!) or Tuition.io, which specifically targets student loans, allowing students to track information and payments over time.
Entrance & Exit Counseling
Most colleges and universities require entrance counseling to initiate students into their duties as borrowers. Although many programs omit talking about the award letter, they shouldn’t. Incoming students benefit from fully understanding the borrowing process, including the fact that they can accept less aid than the maximum amount. Award letters should be simplified and digital so they can link to video and other resources, and financial aid offices should track the open rates to better target their outreach programs. All this and more is possible with a cloud-based resources like AwardLetter.
Exit counseling provides a neat end bracket for the college experience, reiterating student borrowing duties as students are about to graduate (or drop below the required number of credit hours). Provide a thorough program, with examples, personalization and information about what happens when defaults occur.
Peer Financial Counseling
Sometimes the best way to reach a student is through another student. Set up peer financial advising sessions, where graduates help other students out with advice, understanding, stories, speakers and valuable financial information.
Although as a financial aid director you have no direct control over who pays back their loans and who doesn’t, you absolutely can influence the amount of information available about loans, default, repayment and financial literacy in general. Doing so will not only help your students, it will help you by boosting the success of your alumni and the reputation of your school.