Go Beyond Regulatory Requirements in Default-Prevention Planning
Steve Wood, a USA Funds® national debt-management consultant, offers financial-aid administrators suggestions for programs and services to include in a default-prevention/debt-management plan.
Schools understand they must provide entrance and exit counseling, report timely and accurate enrollment information to the U.S. Department of Education, and share academic-progress information with all school departments. But the ideal default-prevention/debt-management plan should do more than just meet federal regulatory requirements.
Consider some of the following suggestions as you develop or update your school’s plan.
Start early! When you host open houses for high-school students and their parents, start the discussion about how important it is to live like a student while in college. USA Funds Life Skills®, USA Funds’ comprehensive financial-literacy program designed for undergraduate and graduate students, can help you focus students and parents on the importance of budgeting. The curriculum also provides strategies to reduce living expenses, and shows how to explore all types of funding resources.
Bolster your message by repeating these sessions during freshman orientation and freshman-seminar classes.
Use online entrance counseling. Federal regulations mandate that all students who receive Federal Stafford loans and graduate PLUS loans complete entrance loan counseling. This counseling is another opportunity to stress the importance of managing debt. USA Funds Stafford Loan GuideSM allows students to review the required counseling information online and when it’s convenient for them.
They’ll learn their rights and responsibilities as student-loan borrowers, loan-repayment options and loan terms, and information about how to make interest payments while they are in school if applicable. They also will learn the consequences of defaulting on their student loans.
Continue financial-literacy efforts. If students hear the advice once, they might take away a tidbit. If they hear it again, they’ll take away even more.
USA Funds Life Skills offers nine modules and three minimodules that make it easy for you to customize the information you want to provide. Review USA Funds Life Skills best practices, which show how schools nationwide have implemented the program.
Involve your peers throughout campus. Creating a successful debt-management/default-prevention plan doesn’t begin and end in the financial-aid department. Work with peers in the academic-affairs and student-affairs areas to ensure good communication throughout campus.
Including these departments in your plans helps prevent students from falling through the cracks. If a student-affairs staff member identifies a student having financial difficulty, for example, have a plan in place to make sure the student receives help from the financial-aid office.
Give students annual loan updates. Review students’ indebtedness with them each year, and point them to tools such as repayment calculators that can help them determine estimated monthly payments using different repayment options.
USA Funds also offers the Borrower Debt Management Information Service to assist schools in their efforts to help students keep track of their loans.
Use online exit counseling. Students who receive Federal Stafford loans also must complete exit loan counseling. Take this opportunity to again stress the importance of debt management. USA Funds Student Loan Transition GuideSM is an online exit-counseling tool that includes individualized education-loan data for each student.
Students get reminders of their rights and responsibilities as student-loan borrowers. They also can review their repayment options, obtain monthly payment estimates, and listen to students explain the repayment decisions they made.
Keep accurate enrollment records. Make sure your debt-management/default-prevention plan calls for accurate and timely reporting of students’ enrollment data. Maintaining these records helps ensure the accurate timing of borrowers’ grace periods, if applicable, and repayment periods. Consider regularly comparing your school’s records with loan data from the National Student Loan Data System.
Communicate with student-loan borrowers. USA Funds Debt Manager® can help you stay in contact with your students during their academic programs and after they leave school. It’s a good idea to start during the grace period. You can customize templates available through USA Funds Debt Manager so the letters or e-mail messages include the information you want.
Use this correspondence to introduce yourself as a resource for students who need to discuss repayment options. Contact students who become delinquent in their loan payments to help them successfully repay their loans.
To learn more about how USA Funds can help with your school’s default-prevention/debt-management plan, contact me by e-mail, or call me at (813) 973-2782. Or, contact your regional debt-management consultant.