The Office of Postsecondary Education released a “Dear Colleagues Letter’ (DCL) on April 6, 2015. In the letter, schools are reminded about an executive memorandum signed by President Obama. The memo directed the Department of Education (DOE) to help students better manage their debt. The letter also shows schools what they can and can't do when it comes to loan counseling.
How well do you know your school’s loan counseling requirements and flexibilities? Here’s a list of things the DOE wants you to know:
- All first-time borrowers are required to undergo entrance counseling.
- A school may include additional content in its required entrance counseling than what is required by law. The material may be presented online or in person but must be conscious of time, effort, and relevance.
- A school may include a test as a part of its entrance counseling. However, a passing score may not obstruct a student’s ability to borrow.
- A school may require exercises, such as a budget, to help improve financial literacy. “However, the institution may not unreasonably impede a student’s ability to borrow, for example, by requiring the student to justify the need for a loan.” (DCL)
- A school may require student participation in an activity if that activity is part of the school’s entrance counseling program implementation.
- A school may not require a student to take entrance counseling more than once. Even if they are transfer students who received counseling at a different school. However, a school may encourage students to partake in supplementary counseling. The school must make it clear that the additional counseling is not the same as the required entrance counseling.
- Schools may strongly recommend that students participate in additional counseling.
- Schools may provide, but not require, a financial literacy course for students. “However, an institution may not make the disbursement of Direct Loans contingent upon completion of such activities.” (DCL)
- Schools may not require additional loan counseling beyond first-time loan counseling. However, a school may require a student to meet certain conditions if that student is failing Title IV satisfactory academic progress (SAP) before he or she can receive additional aid.
- Schools may develop a policy that uses info about their borrowers to identify who might benefit from additional counseling.
The question is, what are you doing to take advantage?
More and more schools are using iGrad to improve their entrance counseling programs. The iGrad Financial Literacy Platform uses game-based learning models to maximize engagement and go beyond content acquisition and mastery. Built into the system are powerful reporting tools that track knowledge gain, content consumption and demographic data. Data can be analyzed from system-wide to individual progress, and are available online, on-demand.
Want to know how colleges are implementing financial literacy programs?
Download one of our financial literacy eBooks to find out!
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Financial Literacy Initiative
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Compendium
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Each curriculum is customized to fit the needs of each student and comes ready with interactive, video-based models on financial core competencies, student loans, easy-to-grade assessments and more.
Features also include student loan balance reminders, FAFSA tutorials, scholarship assistance, repayment calculators, job search engine with resume analyzer and cover letter assistance, and personalized federally compliant Entrance & Exit Counseling courses.
By helping students better manage their money, you can help yourself. Implementing better financial literacy programs can help your school’s perceived value. Students who have less debt are less likely to drop out and more likely to donate to their alma mater after graduation.
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