Home > Student Loans > 7 Things Colleges Do to Help You Pay Your Student Loan Debt

Comments 1 Comment

If you’re one of the millions of Americans with federal student loan debt, you might remember going through loan counseling — once before you received the loans and once when you were leaving school, about to repay them. Then again, perhaps you don’t recall doing so, because an online counseling session (the most common format) isn’t the most memorable part of college.

Lackluster student loan counseling isn’t solely responsible for the high default rate among student loan borrowers (11.8% of student loan borrowers who entered repayment in 2012 have since defaulted on those loans), but improvements to it could be part of a solution to bring that default rate down.

A new report identified some practices that may improve borrowers’ financial success after graduation. The report comes from TG, a nonprofit that administers the Education Department’s Federal Family Education Loan Program (FFELP) loans made before July 1, 2010, and the National Association of Student Financial Aid Administrators (NASFAA). The groups studied default rates, surveyed financial aid professionals and called financial aid directors across the country in search of schools with lower-than-average default rates and exemplary student loan counseling procedures.

After that initial research, TG and NASFAA decided to focus on eight schools: Baldwin Wallace University, a private, four-year school in Berea, Ohio; Broward College, a public, four-year school in Fort Lauderdale, Fla.; El Paso Community College, a public, two-year school in El Paso, Texas; Northern Virginia Community College, a public, two-year school in Annandale, Va.; Ohio State University, a public, four-year school in Columbus, Ohio; SUNY College of Environmental Science and Forestry, a private, four-year school in Syracuse, N.Y.; University of South Florida, a public, four-year school in Tampa, Fla.; and Western Technical College, a private, for-profit, two-year college in El Paso, Texas.

Each school conducted student loan counseling in its own way, but they had some common practices that may indicate why the borrowers at these schools seem to have greater success repaying their loans than the average borrowers at similar institutions. Here’s what the researchers believed to have a positive impact on student loan repayment.

1. Better-Trained Staff

A lot of schools confine the student loan business to the financial aid department. At many of the eight schools the researchers visited, college staff from various departments had roles in financial education and loan default prevention. By having more people trained to deal with these matters, students get “consistent messages … about managing finances and borrowing responsibly,” the report said. That’s the idea, anyway.

2. Financial Literacy Programs

Many of these schools offer ways for students to enhance their personal finance education. For example, El Paso Community College incorporates financial literacy education into a required course for first-year students.

3. Peer-to-Peer Financial Coaching

Ohio State and the University of South Florida have programs set up so students can work with another student on their personal finances. The financial coaches in these programs are students (often majoring in finance or accounting) who receive extensive training on personal finance topics before they work with student clients.

These programs are separate from the universities’ financial aid offices, giving students a different outlet for addressing financial concerns in a setting they may find more relatable.

4. Games

Sometimes, getting someone to do something undesirable (like getting loan counseling or going to the financial aid office) is best accomplished through incentives.

The University of South Florida advertises its financial aid services at the weekly “Bull Market,” where student organizations and vendors set up to get students interested in whatever they’re doing. The financial education program has games and giveaways to attract students, and any prizes must be picked up at the program office — that way, the students learn where it is and what it offers. Maybe they even sign up for a program while they’re there picking up their prizes.

The University of South Florida also promotes a $500 student loan payment drawing, which students can enter if they participate in in-person loan counseling. Ohio State University has held a “cash cab” event. Students who rode in the golf cart (called Buck$ Bus) could win a $10 gift card if they correctly answered financial literacy questions.

The other colleges put a lot of effort into marketing their financial education services as well. Baldwin Wallace University offers financial education workshops and webinars throughout the year, even on some Saturdays, to make sure students have the opportunity to learn these topics and know what resources are available to them on campus.

5. A Focus on Students Likely to Struggle

Making sure students know their options for seeking financial help is important, but some people simply aren’t going to ask, and they’re often most in need of assistance. In an effort to solve that issue, some schools target certain student populations with financial education. Baldwin Wallace University, for instance, has a program for single parents, which provides financial literacy programs and other financial assistance. At El Paso Community College, students failing to make academic requirements must take financial literacy programming as part of their appeals process.

6. Fear Tactics

To satisfy federal student loan entrance counseling requirements, Broward College makes its first-year students attend a two-hour, in-person workshop on debt management. According to the report, the course takes a strong tone, described as “scared straight”. For example, if you show up five minutes late, you’re prohibited from entering and told you have to come to another session before you can receive your loan money. This underscores the importance of the counseling and ensures everyone gets all the information presented. The idea is for students to understand the serious impact student loans can have on their futures, so they’ll make responsible choices about debt well before they have to repay it.

7. In-Person Loan Counseling

Six of the eight schools require in-person loan counseling. The minimum federal requirement is an online program through the Department of Education, but some schools try to deliver the information in person because they believe it’s more effective.

Having someone hand you paperwork with your loan information and look you in the eye as she explains default, wage garnishment, debt collection and bad credit — all consequences of not repaying your loans — can have a lasting impact. To have someone tell you how hard it would be to buy a house or a car (even rent an apartment) because you missed student loan payments is a little scary, but it’s a harsh truth all borrowers need to understand.

More on Student Loans:

Image: Jupiterimages

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Dorothy Martin

    Do you have any recourse if you did not receive counseling?

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team