Some Colleges Help Students Avoid, Handle Debt

Now that President Obama has earned reelection, the Student Loan Ranger is anxious to see if he'll be able to fulfill his promises to address colleges' soaring tuition and skyrocketing student debt balance.

For example, you may remember a promise to hold schools accountable for costs. And the Student Loan Ranger hopes the administration will require schools to adopt initiatives like the Financial Aid Shopping Sheet and College Scorecard.

There are also a few things schools could do—which some are already doing—to help students.

One of the best ways to ensure students aren't laden with student debt is to minimize the need to borrow. One ambitious method has been put at place at schools including Davidson College in North Carolina, which instituted a "no loans" financial aid policy in 2007.

At Davidson, loans aren't included in students' financial aid award letters (although families may still borrow loans), and demonstrated need is funded through grants and student employment.

Of course, this requires a fair amount of resources; Davidson must raise $70 million to permanently endow the policy. But schools that reduce the need for student loans are doing a lot to free students from heavy debt burdens.

It's also important to ensure students are in a better position to repay their student loans by providing the support necessary for them to complete college. As Education Sector reported in February, borrowers who drop out face higher loan default rates, in addition to higher unemployment and lower incomes. Some schools, including St. John's College in Maryland and Elizabeth City State University in North Carolina, are providing tailored support services to students through graduation.

Larger-scale efforts like the State University of New York's plan to prevent student loan borrowers from defaulting also help. As Inside Higher Ed notes, SUNY may be the first to implement measures system-wide. While SUNY is not trying to convince students to borrow less, it will provide more information to students (including by using the model Financial Aid Shopping Sheet, which it adopted earlier this year), and identify risk factors and provide support services to students who have a greater risk of defaulting throughout their college career.

SUNY also will share information with the Department of Education about the impact of certain factors and strategies that can be used to prevent these students from defaulting to help develop broad-scale policies.

Of course, focusing only on default rates can lead schools to opt out of the federal aid system, according to the Project on Student Debt, putting their students in a worse situation by denying them access to the important borrower protections for federal loans and crucial need-based aid like Pell grants.

To help, measures to encourage responsible student loan borrowing and prevent defaults are being undertaken by some community colleges, as detailed in a report commissioned by the Institute for College Access and Success (TICAS) and the California Community Colleges Student Financial Aid Administrators Association.

Based on its findings, the report identifies important steps schools can take, including: "Ensure students know that loans are available;" "Provide guidance to help students understand the implications of their borrowing decisions;" "Coordinate … to make students' academic success the top priority;" and "Require additional counseling for students who may be at risk."

But, as the report notes, there are measures that governments are better able to undertake. It encourages them to: "Provide better funding for financial aid administration;" "Communicate positive practices to colleges;" "Provide an information clearinghouse for student borrowers;" "Supplement colleges' technological capabilities;" and "Directly assist colleges with default management activities," among other things.

Students should know as much as they can before borrowing. Something small every school can do to help is work on its net price calculator. TICAS has reported many net price calculators are still difficult to find and use.

Students should also evaluate how they'll repay loans before they borrow. Equal Justice Works provides free webinars and sells a new e-book, "Take Control of Your Future," that can help.

Radhika Singh Miller is a program manager for Educational Debt Relief and Outreach at Equal Justice Works. She has served on student loan committees in the Department of Education's negotiated rulemaking focusing on the College Cost Reduction and Access Act (CCRAA) and other debt relief initiatives. Radhika graduated from Loyola Law School Los Angeles. Prior to joining Equal Justice Works, she was a staff attorney at the Partnership for Civil Justice, focusing on constitutional and civil rights litigation and advocacy.


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