Educating Students about Debt: Who Bears the Responsibility?
I recently read an article by Associated Press writer Leslie Wines that I'd like to share with you: "Should schools warn students about debt?"
It goes right to the heart of an important issue in the financial aid community: Who's helping students make informed decisions about their education debt?
The article points out the dilemma facing the professionals who help students finance their educations:
"There has been no discussion about whether this (excessive education debt) might be to the detriment of the student," said Mark Oleson, director of the University of Missouri's Office for Financial Success, which counsels student borrowers. "It has always been assumed that staying in school is all that matters.
"Education has never been thought of as an investment that involves risk, but it does," he said. "Just like the stock market."
It's an interesting point. And according to ASA's data, student borrowers are feeling the gaps in their knowledge about this debt. In a 2007 study sponsored by ASA and conducted by researchers at Miami University in Ohio, a majority of students surveyed agreed with the following statements:
"Students who borrow money should receive financial counseling."
"College students should receive more information about loan repayments."
"When I borrowed money to complete my undergraduate degree, I had only a vague idea about the amount of debt I was incurring."
At the same time, in a survey by ASA at our 2007 Symposium and the annual NASFAA conference, financial aid officers reported that, due to time constraints, financial literacy education wasn't a main component of their roles:
90.8% of respondents said they spent less than 25% of their resources on default prevention activities.
85.4% of respondents said that financial literacy training is not included as part of their school's official curriculum.
So clearly, a disparity exists. Students want, and need, solid information about the consequences of incurring education debt — and the tools to manage that debt. But financial aid professionals are swamped with the logistics of delivering education loans to these students in time for tuition deadlines, and they rarely have the resources to engage in nuanced conversations with students about the risks of education debt.
This is where I believe ASA and other guarantors can step in to help. As non-profit organizations in the education loan industry, we can partner with schools to provide financial literacy training. And because our relationship with the student loan borrower continues throughout repayment, we can protect your students from payment problems after they've left your campus.
What do you think about the need for financial literacy education for borrowers? Who bears the burden for providing this guidance? Are you and your school finding success in this area? We want to hear your experiences!
Posted by Susan Nathan on November 06, 2007 at 02:51 PM EST
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Blog Author
Susan Nathan
Vice President, Lender and School Services
Biography
Susan Nathan is Vice President of Lender and School Services at American Student Assistance (ASA)®. She has held this position since October of 2002. Ms. Nathan joined ASA in February 1987 as supervisor of the external program review unit. She has held roles of increasing responsibility in product development, operations, client management and customer service, and marketing. She has been a member of the design teams for a number of ASA’s signature products, including FASTFUND, ASA’s disbursement product, and ASA Direct, ASA’s web processing tool. She was the manager of the business plan for ASA’s major system conversion in 1998.
She is credited with the development of ASA’s nationally recognized client management team. Ms. Nathan oversees the ASA Advisory Council, and is the staff liaison to the Marketing Planning Committee of ASA’s Board of Directors.
Prior to joining ASA, Ms. Nathan was a Financial Aid Officer for Lesley College. She is a graduate of Brown University and a fellow of the Institute for Educational Leadership. She is a member of state, regional and national financial aid associations and is routinely sought by the financial aid community as a professional development trainer.
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