By Matt Nettleton, Inceptia Strategic Business Director
As students increasingly rely on loans to finance part or all of their college education the need for relevant, timely information to help make informed borrowing choices has become more critical than ever.
Students themselves are indicating a need for such initiatives, as demonstrated through a number of surveys that uncover numerous confusing concepts for loan borrowers. Consider the following:
· 48% of borrowers either don’t know or incorrectly estimate the amount they have borrowed.1
· 28% incorrectly believe they have no federal loans at all.1
· 94% of student borrowers do not understand their loan repayment terms.2
The ramifications for borrower confusion can be significant. When students do not invest in or avail themselves of existing loan counseling resources, those students, as well as schools and society at large, suffer from the effects of over borrowing, lower degree attainment, increased attrition, and student loan default.
A number of schools and states, however, are using a simple yet innovative approach to help students actively manage loan debt as they progress toward degree completion. These institutions use loan summaries, sometimes called “debt letters,” to supplement loan counseling practices and expand on financial education outreach—keeping students apprised of their individual borrowing levels and allowing them to make informed choices about future repayment scenarios.