Open Lines Of Communication Key In Default Prevention
Submitted by: Kathy Bixby and Larry Viterna, USA Funds Services
Financial-aid counseling for students during their time on campus is a critical element in lowering the risk of future education-loan-repayment problems. From meeting with students each time they apply for student loans, to periodically updating students' addresses, there are myriad opportunities to contact students to reinforce the importance of sound debt management. The following tips are among those that the USA Funds® Debt-Management Best Practices Manual offers for ongoing counseling of continuing students:
- Counsel students each time they apply for education loans. Advise them about how much they have borrowed, as well as their rights and responsibilities as borrowers, and discuss how much debt they might accumulate before leaving school.
- Each time that a student applies for a loan, check the address on the loan application. Whether you're reviewing a new application or an existing Master Promissory Note (MPN), the address provided should be one where the student will receive mail after leaving school - not a temporary address. Also check the e-mail address, if applicable.
- At the end of each year, mail students reminders that the financial-aid office is available to answer their questions. Mark the envelopes with the phrase "address correction requested." These reminders keep students informed about where to turn for help, and they help financial-aid administrators keep students' address information current.
- Meet with any student whose address changes. Emphasize to students the importance of keeping their lenders informed about their changes of address.
The online Best Practices Manual includes samples of academic-year completion letters and change-of-address announcements to lenders. It also offers additional debt-management tactics for students' in-school period, as well as tips for the student-loan-origination and loan-repayment phases. USA Funds' Default-Prevention Council and Debt-Management Team developed the manual as part of USA Funds' multi-million-dollar initiative to help colleges and universities reduce student-loan defaults.
To access the Best Practices Manual, visit www.usafunds.org, the USA Funds Web site. Select Financial-Aid Professionals, Debt-management information and Best Practices Manual.
For more information about the Best Practices Manual and its in-school-period default-prevention strategies, contact your USA Funds debt-management consultant, Carol Buchli. You can reach her at 573-341-2542; toll-free at 866-497-USAF (866-497-8723), ext. 7877; or by e-mail at cbuchli@usafunds.org.
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