With the end of the academic year here, seniors across the country are juggling finals, graduation plans, and looking toward the next chapter of their lives. In the middle of this busy time, students have another major responsibility to tackle: student loan exit counseling. The Department of Education mandates exit counseling for all federal borrowers, but all too often the guidance students receive is tedious and difficult to understand. Here are some easy ways you can improve the loan information your students receive at the end of their education.
Personalize borrower learning
When a financial aid counselor just does an “info dump” of details, the chances of the student understanding their obligations drop. Because loans can be such a significant part of a student’s life, it’s essential that the information a student receives is specific and applicable to their own situation. For example, the information a Perkins borrower needs to know is different from that needed by a student who has private loans. Ensuring your students have exactly the information they need makes it easier for them to develop a realistic plan for repayment.
Simplify the jargon
So many of the materials students receive during their exit counseling are rife with jargon and complex financial terms. While learning to understand these terms is a key part of becoming a financially responsible borrower, don’t miss the opportunity to enhance the student’s education a little bit more. Strive to provide information that’s written in a friendly, clear tone with easily accessible language. Define the complicated terms, so borrowers can build their understanding. If you provide your students with written materials, whether online or printed, avoid long sections of text in favor of shorter, easier-to-understand chunks.
Keep the future in mind
One of the biggest issues of inadequate counseling is limited focus. When the advice a student receives is just about rights and responsibilities, some students may fail to understand the long-term impact their repayment strategy can have on their future. Effective student loan exit counseling not only covers details of the loan, like the interest rate and loan servicer, but also how repaying their loan fits into the student’s bigger picture in terms of other major investments down the road, like a mortgage or saving for retirement. This information also increases the student’s overall financial literacy, which can reduce the likelihood of default.
These three small steps – personalizing, simplifying, and expanding the focus of your student loan exit counseling – can have a considerable and positive impact on your students. Not only are you helping them understand their immediate financial obligations, you’re giving them information that will serve them well beyond graduation. Your institution has done a great job getting your senior class to the finish line. Now help them cross it.