The most important thing an institution can do to help prevent a student defaulting on his/her loans is pure information and education. Educating a potential student regardind their obligations where student loans are concerned will benefit them in the long run as it pertains to making an informed decision when choosing their loan options. Many students are under the impression that scholarships, awards, or grants will be sufficient enough to handle the cost of their tuition and if or when they need to secure financial aid, it will automatically be available for them to receive. This is the worst possible scenario as this is how so many students end up in default, thus enter into a bad credit category.
I think Mary said it best. You have to make the student awhere right away and during their educational process. We use I-Grad to help get the questions answered.
Our Financial Aid team reviews and discusses with each student their package and financial aid obliagtion in depth. We help the student understand that they will be paying their student loans back and what their payments could look like.
Natalie,
What a great tool for the students!
Kimberly Stein
Our school recently started a program called iGrad. iGrad is a financial literacy tool students can use. They learn how to make a budget, information on credit scores, positives and negatives to using credit cards, and information on their student loans and how to manage them.
The most important thing an institution can do is educate their students on defaulting on their loans. This can be done through a series of mandatory classes.
Our FA department is excellent at providing the student with information and letting them know they have options. When you provide the student with full disclosure of the information they are able to plan and make smart decisions when it comes to their loans. Often time when someone does not understand the information presented to them they make decision based on emotion and the things they know, and that can end up hurting them in the long run. The implementation of IGRAD is one of the best tools I have seen in a while.EXCELLENT TOOL!!
Embed financial education and literacy into the program every step of the way. This in addition to entrance and exit counseling.
Our Financial Aid staff goes over all details of loans with the student (and parents if needed for HS students). They go over how vital it is to repay loans. They break down how FA works – grants, loans, scholarships, etc. If a student is aware from the beginning of their obligations to a loan, they are more likely to pay them back. We like to educate our students as much as possible. We also have a Default Specialist who works with all of our students (including new students) who need help.
Our Financial Aid staff goes over all details of loans with the student (and parents if needed for HS students). They go over how vital it is to repay loans. They break down how FA works – grants, loans, scholarships, etc. If a student is aware from the beginning of their obligations to a loan, they are more likely to pay them back. We like to educate our students as much as possible. We also have a Default Specialist who works with all of our students (including new students) who need help.
i think it's definitly important to keep the student educated on their loans. we have a student portal set up for students to continually check the status of their loans and keep informed about what's going on.
We have a new application in place for our students called Igrade, our students complete modules 1 & 2 to introduce them to financial planning. This is done at their Orientation. I think this is a great tool.
Having an entrance and exit counseling session can be very helpful when helping a student with the financial aid process. They will be aware of making the best financial choices for their future.
Students that are informed of their debt responsibilities seem to fulfill their obligations at a higher percentage rate.
To assist in preventing defaults on student loans, students at our school meet individually to review the entire aid process with Financial Aid and Student Accounts. These detailed meetings are in advance of enrollment and outline what aid that a student is eligible for and what later is obligated to repay. The student will then have an understanding of these amounts in grants and loans so he/she can formulate a strategy and properly budget for the future repayments on student loans after graduation.
Appropriate financial aid counseling is key to students not ending up in default post graduation. Financial aid administrators should give students a packet with the contact information of their lender in case something should happen where they need income based repayment. Upon entering the school and taking out financial aid the administrators should advise accordingly on how much they should take out in student loans. Many students come in counting on living off of their "refund" checks and don't understand what they take out will need to be repaid with interest.
I think that making sure that the student is fully aware of how much they are taking out in student loans is very important to the default rate. If they are clear up front it helps. Also, placement is very important in the default rate. If we help place graduates in jobs and they are working they are more able to pay back their loans.
By spending time with the student in the Finance Appointment our Fianance Team has the ability to counsel the student and make themselves available to answer their questions. By explaining step by step and slowing down the process to give the student time to truly understand their responsibilty we are ensuring our students are practicing responsible lending.
Just giving the student the proper info on loans and responsibility of paying.
Our institute does not offer federally funded financial aid but, i would believe communications with the student and the financial aid office would need to be of a high level to help prevent defaults.
