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Debt Management: Continual Education Crucial in Preventing Defaults
by Kathy Bixby, Barb Davies, Kevin Hoover
and Elise Sanders - USA Funds Services
Continual education that extends beyond the campus
financial-aid office is key in curbing education-loan
defaults, according to debt-management consultants who
are working individually with schools in the West.
Carol Buchli and George Covino are members of a debt-management
team that has assisted more than 400 post
secondary institutions nationwide as part of an overall effort
to help colleges lower their education-loan default rates.
Based on one-on-one consultations, workshops and other
default-prevention work with schools, the debt-manage-ment
consultants recommend the following steps to help
prevent education-loan defaults:
- Educate parents, and get them involved. When parents
actively participate in the financial-aid process, and when
they understand the rights and responsibilities that come
with getting financial aid, they can be partners to financial-aid
professionals. Buchli and Covino suggest that schools
schedule activities such as a financial-aid-awareness week
for potential students and parents.
- Conduct consumer counseling and debt-management
workshops throughout the student's college career. Go
beyond the federally required student-loan entrance and
exit counseling, reinforcing the importance of debt management
with life-skills courses and consumer counseling.
- Promote early awareness. Junior and senior high school is
not too early to talk with students and their families about
what college will cost and the options they have for paying
higher-education expenses.
- Encourage students and their families to borrow less. Help
students and parents make good decisions about the financial
aid that they seek and accept, and promote grants and
scholarships.
- Make debt management an effort that extends beyond the
financial-aid office. Because high default rates affect the
entire school, make default prevention a campus-wide effort
by involving other departments, including the registrar's
office and alumni programs. Buchli and Covino also recommend
that schools include a course about debt management
in the campus' curriculum.
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