Driven in part by underutilization of income-driven repayment plans and elevated federal default rates, TG, in consultation with the National Association of Student Financial Aid Administrators (NASFAA), conducted a study on the efficacy of federal student loan counseling.

The report, Above and Beyond: What Eight Colleges are Doing to Improve Student Loan Counseling, highlights innovative programs by a small number of institutions that have proven effective, in spite of limited budgets and resources.

The schools featured include:

  1. Baldwin Wallace University – Private Not-for-profit 4-year (Berea, OH)
  2. Broward College – Public 4-year (Fort Lauderdale, FL)
  3. El Paso Community College – Public 2-year (El Paso, TX)
  4. Northern Virginia Community College – Public 2-year (Annandale, VA)
  5. Ohio State University – Public 4-year (Columbus, OH)
  6. SUNY College of Environmental Science and Forestry – Public 4-year (Syracuse, NY)
  7. University of South Florida – Public 4-year (Tampa, FL)
  8. Western Technical College – Private For-profit 2-year (El Paso, TX)

The following programs are featured:

Cross training: providing training between and within departments to create consistent messages about managing finances and borrowing responsibly. Four of the eight schools demonstrated this model, including:

  • Baldwin Wallace University – has a retention committee that includes representatives from many departments
  • El Paso Community College – the default prevention committee is cross-departmental, with members from six departments
  • Northern Virginia Community College – several departments participate in training sessions to learn more about the financial aid office
  • Western Technical College – has formal training with cross-departmental sessions and informal cross training aided by a small campus and a collaborative campus culture

Holistic: creating an environment in which students receive a broad financial education. Six of the eight schools demonstrated this model, including:

  • Baldwin Wallace University – a cross-departmental financial literacy education team developed their financial literacy program
  • El Paso Community College – has incorporated financial literacy modules into a required first-year class and into the satisfactory academic progress (SAP) process
  • Northern Virginia Community College – has developed an online financial literacy program using a third-party vendor
  • Ohio State University – financial wellness is one of nine dimensions of the school’s student life wellness program
  • SUNY College of Environmental Science and Forestry – their financial aid director, a certified financial counselor, developed a home-grown financial literacy program
  • University of South Florida – students can sign up for a mini-program that allows financial aid staff to monitor their progress in school, helping them stay on track to retain their financial aid

Marketing: using multiple points of contact to increase the impact of a school’s communications. Four examples of specific focus on this model include:

  • Baldwin Wallace University – features financial education in orientation, workshops, and webinars
  • El Paso Community College – incorporates financial education into many parts of the college experience, including in-person annual loan counseling
  • Ohio State University – set up its wellness center in the main student recreation area to meet students where they already are
  • University of South Florida – sets up a booth in the quad once a week and uses games and giveaways to entice students

Targeting: making thoughtful decisions about what services to offer and which students receive those services. Schools exhibiting this approach include:

  • Baldwin Wallace University – their SPROUT program targets single parents with information and assistance, including financial literacy
  • El Paso Community College – has incorporated a financial literacy module into the academic appeals process
  • Northern Virginia Community College – piloted its financial literacy program with a targeted group of students before launching with all students
  • Ohio State University – piloted its second-year student program with a small number of students
  • University of South Florida – requires all incoming freshmen to complete an online financial literacy module

In-person loan counseling: developing strategies to provide a more personalized experience for some or all of the borrower population. The study found six examples:

  • Baldwin Wallace University – offers small group in-person entrance counseling sessions several weeks into the start of the semester
  • Broward College – first-time borrowers are required to attend an in-person entrance counseling workshop
  • El Paso Community College – offers an in-person entrance counseling workshop and strongly encourages borrowers to attend annually
  • SUNY College of Environmental Science and Forestry – borrowers can attend small group exit counseling, with 5 to 15 students per session
  • University of South Florida – borrwoers can receive in-person exit counseling in either group or one-on-one sessions
  • Western technical college – provides in-person one-on-one entrance counseling and small group exit counseling

Peer-to-peer model: using well-trained students as financial coaches to their peers

  • Ohio State University – students can receive one-on-one financial education from a trained peer coach
  • University of South Florida – peer coaches see students for one-on-one sessions and give presentations at seminars and orientation

insideARM Perspective

While it may seem that these suggestions are all in the domain of the schools, I’d posit that these could be in the domain of collection agencies as well, for a number of reasons.

One, as Carl Perry, Senior Vice President at Progressive Services, Inc., and Vice President of the Coalition of Higher Education Assistance Organizations (COHEAO), states, “Financial literacy is good for students, good for schools, and ultimately good for our industry. If you are doing the right thing, you end up getting paid. And contributing to financial literacy is the right thing.”

Two, financial literacy is a major stated goal of the CFPB. That alone is a good reason to engage. At a minimum, collection agencies that work with schools can use studies like this as a guide to assist in advising their clients. 

Three, what if this could also represent a business opportunity? Many collection agency employees would be uniquely qualified to educate students and their families on how to understand their loans. Revenue cycle management firms assist their clients with upstream services – billing, intake, etc. Why not extend this model to the education world?

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