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

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

Tamy Garofano, TG Regional Account Executive

It’s a perennial challenge for financial aid administrators: how to deliver loan counseling so that students walk away ready to practice what they’ve learned about borrowing and fiscal responsibility. Think about entrance counseling, for instance, typically provided at the start of school. Not only are students adjusting to new schedules, they’re juggling assignments, acclimating to dorm life, and meeting dozens of classmates in a short time. The experience can be a recipe for cognitive overload and a barrier to receiving one of the more important messages students will hear in their academic careers — that is, what to know and how to manage the debt they’re taking on, perhaps for the first time in their lives.

How can you engage students in loan counseling so that they’re more likely to live by what they learn? Survey colleagues at other Title IV schools and you’re sure to find some surprising ideas. The key strategy for many schools: Reinforce counseling concepts in multiple ways at multiple times. Tallahassee Community College (TCC) offers just one example.

Preparing for the long haul

More than 40 percent of TCC’s student population comes from a widely dispersed, tricounty area surrounding Tallahassee, which means the school has a large online student community. To serve the needs of this remote group along with other students, the school relies on the Department of Education’s online entrance counseling module for federal Direct loans. TCC makes entrance counseling a requirement for each year that a student borrows. And it supplements counseling information with seminars on financial literacy topics as part of a general academic and life skills course offered to freshmen.

“In the seminar, we talk about concepts from entrance counseling,” said Bill Spiers, TCC’s director of financial aid. “We focus in particular on how to borrow responsibly and manage debt. We also describe the consequences of default.” TCC will inaugurate a new version of the seminar next year that explores such money management skills as balancing needs and wants. It may also offer online financial literacy training as a way to broaden audience reach and make content available at a student’s convenience.

Like a lot of schools, TCC’s financial aid philosophy is based on some simple but important ideas: Make students aware of what they borrow and educate them on what that means for the future.

“When students reach 50 percent of their aggregate loan limit,” said Spiers, “we ask them to come in for an in-person discussion. We want them to understand the obligation they’re taking on and make sure they’re prepared for the long haul.”

Campus allies in counseling

PCI Health, a proprietary school based in Texas that trains students for jobs in the healthcare industry, takes a similar approach to financial aid counseling. Lori Ordoñez, director of student loan services at PCI Health, says the school tries to amplify basic ideas from entrance counseling with in-person interaction.

“We gather the students five to ten days after classes start for a talk about loan debt,” said Ordoñez. “We want to make sure they’re thinking realistically about how to pay loans back.” The school also tries to weave in awareness about borrowing throughout the term — for example, by adding financial literacy assignments in some classes.

A key stage in PCI Health’s loan education effort is exit counseling. The school offers exit counseling online or in person but prefers to meet with students. “We can talk to them about interviewing strategies and prepare them for the job market,” said Ordoñez. The school then follows up throughout the loan grace period, talking with borrowers to make sure contact information is up to date and offering placement help as needed.

Something Ordoñez and her staff have on their side — the commitment of the entire campus staff in terms of helping students.

“Our whole school is involved in some way in loan education,” said Ordoñez. “Our staff is aware of default and its consequences and dedicated to helping students manage their responsibilities as borrowers.”

Four tactics for enhancing counseling

Counseling isn’t a science, but techniques for delivering counseling have grown in number as schools focus on default. Here are a set of four suggested strategies. Many schools subscribe to one or more of these tactics as a way to complement borrower education. Consider incorporating these into your own counseling practice.

·         Focus on “at-risk” students: If you’ve done any demographic analysis on your cohort default rate and found that certain factors can predispose a student to having problems with repayment — for example, a low grade point average (GPA) or part-time status as a student — then you can focus your counseling accordingly. You could do this by, say, offering in-person counseling and financial literacy training along with academic support to students with low GPAs.

• Mix it up: in-person and online: If your student population reflects the diverse demographics on many campuses, then it may include both distance learners and part-time students. You can offer online counseling to these groups along with other online resources, including budget worksheets and debt calculators. For students living on campus, in person counseling might be the way to go if your staff can handle it. You can answer student questions more easily and engage them on such issues as borrowing responsibly.

• Add in financial literacy concepts: Most students are novices in terms of managing money. For freshmen and new students, consider in-person financial literacy training that emphasizes such fundamentals as creating a spending plan, distinguishing needs from wants, and establishing realistic long- and short-term financial goals. You can provide tools, such as calculators, for this content online through your website.

• 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 repayment options, and tips on money management and post-college budgeting, to mention just a few items.

For help

To improve counseling, schools should start by reviewing the basic requirements, which are described in the Federal Student Aid Handbook. This resource itemizes what information to provide to students and offers ideas on how to deliver content. Schools can also look to colleagues in the field for suggestions on how to reinforce loan counseling. Industry associations, such as the National Association of Student Financial Aid Administrators (NASFAA), also offer some help in this regard. Finally, schools might also consider research in the field of “active learning,” which creates a laboratory out of a teaching environment and engages students by offering quizzes, group exercises, and other interactive pedagogy.

Tamy Garofano is a regional account executive with TG serving schools in SCASFAA. You can reach Tamy at (800) 252-9743, ext. 6712, or by email at tamy.garofano@tgslc.org. Additional information about TG can be found online at www.tgslc.org.