4 steps to effective personalized student loan counseling

How to help prospective and current students, as well as alumni, to be responsible about taking out student loans and paying them back

One in six American adults has student loan debt, and collectively they owe nearly $1.5 trillion in federal and private loans. While legislators and presidential candidates debate how to address the burgeoning debt load, some colleges are getting personal by offering one-on-one financial aid conversations from the moment a student enrolls—or even earlier.

The goal: Create more responsible borrowers by making more frequent contact with students—rather than just ensuring they go through their federally mandated loan exit counseling prior to graduation.

“Every borrower and financial situation is different. The rules are the same, but having someone sit down and go over your particular situation to help you make borrowing or repayment decisions can be invaluable,” says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors (TISLA), a nonprofit that offers free, neutral student loan advice and dispute resolution assistance.

Megan Coval, vice president of policy and federal relations at the National Association of Student Financial Aid Administrators (NASFAA), says colleges are among the best situated to offer tailored student loan counseling because of the unique relationships they build with students.
Four actions can ensure personalized student loan counseling is most effective.

1. Prepare counselors for difficult conversations.

Some financial aid offices have been lucky enough to hire staff with a student loan counseling background. But many others offer customer service training, which may include how to be honest with students about their finances.

“There are times where we have to have these hard conversations because we can see financially it’s just not the best option for them to come and take out” a sizable loan, says Susan Beard, director of student financial services at Wheaton College in Massachusetts. Suggestions might include beginning at a community college.

Candid conversations work best. “The art is to balance that for them, get them the right amount of loans, which could be none, or scaling back,” says Beard. Wheaton students are encouraged to focus on wants versus needs when taking out new loans. “Yes, you need to pay your tuition bills, but do you need to finance a new computer every year?,” she may say.

Janelle Holmboe, vice president of enrollment management at McDaniel College in Maryland, recalls a situation when a student came to move-in day, but the family hadn’t yet paid their bill. Staff learned they did not have a way to pay the balance, and suggested that the school may not be a good financial fit. The student did not move in, but has stayed in touch about future options that involve transferring credits earned

Student loan debt and older Americans (click on the infographic to enlarge)
Student loan debt and older Americans (click on the infographic to enlarge)

elsewhere so she can still graduate with a McDaniel degree.

“Loan counseling is such a critical piece of a student’s life. We want our graduates to be able to function and live and not be burdened unnecessarily with debt—or worse, bad debt,” Beard says.

2. Interact with all students early.

McDaniel admissions counselors are equipped to walk students and their families through the cost of attendance—including whether loan repayment would be realistic based on an average salary in a desired career field. “Helping them think through repayment before they incur debt is really powerful,” says Holmboe. Staff go through a training program that includes completing the FAFSA and role playing various scenarios related to student borrowing—with the training refined each year to incorporate new challenges or student questions.

Franklin Pierce University in New Hampshire begins each academic year with a workshop for new students, with a portion of content set aside to discuss finances.

In small groups, students are asked to come up with advice they would share with their peers about student loans, financial aid and personal finance. Advice has included being cognizant of interest rates, paying unsubsidized loans first and remembering to apply for financial aid annually, explains Kenneth Ferreira, associate vice president for student financial services.

He builds on their ideas to talk through common issues that loan borrowers face.

Also read: Student loan counseling: Time for a refresh

3. Increase the frequency of touchpoints.

“The name of the game for effective counseling is providing the right information at the right time,” says Mayotte of TISLA. “The struggle is that the right time is different for everybody.”

Getting to students during their first or last days on campus isn’t enough. Administrators should ensure “students realize the financial aid office isn’t just somewhere you stop when you get your first loan,” says Coval of NASFAA.

Wheaton has financial aid counselors available Monday through Friday. Students are free to come in to discuss an account balance, loan amount, whether to take on a new loan, or repayment options. Counselors print out information on the student’s loans, provide servicer contact information, and use online loan and repayment calculators to help a student understand their debt duties.

Financial literacy group workshops are also open to all students. Loan counseling is one content piece, and a campus career center partnership has brought a series of post-graduation readiness workshops (which include detailed loan counseling) to students. This is in addition to the mandatory group or one-on-one exit loan counseling sessions students participate in.

Besides one-on-one loan counseling sessions and presentations on loans and repayment, Franklin Pierce staff meet with approximately 80 percent of students in each graduating class to review their federal and private loans owed, repayment options and how repayment works—including when payments will begin and how to change a repayment amount. Counseling services even extend to alumni, who are encouraged to call or visit the financial aid office as needed after graduation.

Personalized counseling on a shoestring

Offering personalized student loan counseling take resources, even if an institution can create a program using existing staff. Eight options for offices with limited staff time and funds include:

1. Partnering with organizations that offer financial aid content

2. Bringing in non-profit groups focused on financial wellness to offer workshops

3. Collaborating with other departments (admissions, diversity, student affairs, etc.) on campus to pool resources and expertise

4. Leaning on professors who do financial wellness research or teach classes with a focus on finances

5. Promoting or referring students to related community events

6. Asking the institution’s banking partner or a frequently used private loan provider to set up workshops or one-on-one meetings

7. Recruiting and training admissions staff on the financial aid process to help them guide prospective students

8. Surveying students to determine what information they really need and holding seminars or making information on that specific topic available on the financial aid website (rather than trying to be all things to all people)

4. Build individual relationships.

Each student has unique financial circumstances and doesn’t necessarily want to explain their situation to a new loan counselor at every appointment. So some schools have moved toward assigning caseloads to their financial aid staff, providing a dedicated counselor and familiar face when needed.

Franklin Pierce students are introduced to their assigned financial aid counselors during the new student workshop. “What makes the difference is the high level of personal touch that we put on student lending and helping to empower students to make the right decision based on their aspirations,” Ferreira says.

McDaniel is implementing a caseload model during the spring 2020 semester. “Even from the point you’re admitted, we want to make sure you have a person that you work with in our office to help support them through their decision making about enrollment, whether financial aid is a fit, and help them walk through it each year and advise them,” says Holmboe. “I don’t think we’re going to be successful if we haven’t already established a relationship with students.”

Heather Kerrigan is a Virginia-based writer.

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