Help Students Make Wise Borrowing Choices at Key Decisions Points

Submitted by: Shannon Cross, USA Funds account executive

Communicating with your student loan borrowers at key decision points is among the best ways to improve your cohort default rate. Here are some tips for helping students make wise choices about borrowing at four key decision-making points during the life cycle of a student:

Application and first 90 days
The start of students’ time at your institution is a critical time to begin sending messages about borrowing and managing student loan debt.

In activities such as new-student orientation and loan counseling, encourage minimal reliance on borrowing. This message will help students keep their overall debt levels low — and their monthly payments manageable in the future. Share information about average debt levels and repayment terms, so students make informed decisions about whether and how much they’ll borrow.

Rather than overwhelming new students with everything at once, provide targeted bits of education loan information at the specific times they’ll need those details at application and in the first 90 days.

In-school period
For some students, applying for federal education loans is their first experience with borrowing money. Financial education at this stage reinforces your earlier messages and helps students become educated consumers.

When counseling borrowers about their student loans, provide tips for minimizing debt and making wise financial decisions, and help them estimate future income and gauge their ability to repay their loans. Share information about student loan repayment options and how students can track what they owe.

More than 70 percent of students who default on federal education loans left school without earning a degree. So make it a campuswide priority to keep students in school to complete their degree work. Work with other academic and student services offices on campus to identify students with enrollment or loan repayment concerns — and address those issues.

Final year and program completion
Students nearing the end of their academic programs are at a point in which your influence sets the stage for successful repayment.
Federal regulations require schools to ensure that all students borrowing federal education loans receive exit counseling as they cease half-time enrollment. Counsel your borrowers regarding their student loan repayment options, so they can choose the plan that best fits their situation.

Work with your institution’s career placement office to ensure that borrowers identify and pursue jobs that are a good fit for their training — and that will help them repay their student loans.

Communication and support shouldn’t end when a student no longer is enrolled. Actually, it’s when the student has left school that this support is most important.

Now is the time when the relationship you’ve built with students through the previous decision points pays off. Borrowers may not recognize communications from lenders, servicers and guarantors, but they’re more likely to notice and respond to letters, emails and phone calls from the school they attended.

Reach out to borrowers early and follow up frequently about tools and resources — including many available online — to assist as they repay their loans.

For additional resources for counseling borrowers throughout the student lifecycle, visit