Student Obligations
How can we really make students understand how important it is for them to repay their loans? I feel like even after all of the paperwork that is given to them, they still do not feel like they are obligated.
Positive reinforcement (like the sending of “good credit” letters mentioned in section two) speaks to some students, while stressing negative consequences (the unpleasantness of collection calls, wage garnishment, etc.) speaks to others.
Hopefully you have learned some useful strategies from this course. I agree that just giving out a lot of paperwork often does not make a strong enough impression on borrowers. Previous participants have given great suggestions in the forums and have shared what works at their schools. One idea I especially liked was incorporating credit and budget topics into math and business courses.
How do we "handle" students who tell us up front that they probably will not repay the loans? Or the student who does not tell you that he/she will not repay their student loan, but you get an overall feeling from talking with them that they will not repay those loans?
These are the students that need a little more than papers. We discuss the consequences of not paying student loans in detail during our financial aid entrance interview. Most students sit up and listen not only when they are told that wages can be garnished, but when they are told that their income tax refunds CAN and WILL be seized. We also discuss the fact that some employers will not tolerate employees who default on student loans.
The point about employers is an excellent one. Many check credit reports as part of the interview process… that would definitely scare me if I was delinquent on my student loan.
Making Students feel obligated to repay their student loans is to provide them with realistic negative and postive factors that help them understand the consequenses, you have to compare the student loans to the car they drive or the house they live in, for example when educating a student on their obligations you can say if you don't repay your student loans, your credit will be destroyed everything you purchase will be at a very high interest rate and you will pay double the price for something that your really need, if that doesn't work you can also tell them that the government will garnish their taxes and we all know that everyone looks forward to tax time.
Creating a sense of responsibility (obligation) begins at first contact with the student prior to enrollment. Providing comprehensive information relating to the borrowing and repayment of student loans and the inevitable consequences should each individual take this responsibility seriously.
During our Entrance Interview which is conducted during a 1.5 hour session, all aspects of the students rights, responsibilities and especially responsibilities for repayment are stressed. We have had lenders and guarantors tell me thay know when one of our students or graduates calls because of the depth of knowledge and responsibility they exhibit. We do have an advantage because our graduates are grad/professional and the consequences of non payment and default result in loss of licensure.
However, we have had a default rate of less than 1% for several years and never above 2.1% (highest in 1991) so we know good educational practices regarding financial aid and its many responsibilities pays off but it has to start prior to enrollment and be enhanced throughout the educational process.
Brenda,
Congratulations on the thoroughness of your Entrance Interviews and your impressively low default rates.
Your institution is a great example to other schools and proves the importance and effectiveness of quality borrower education.
I know that this sections speaks on the ramifications of NOT paying your loans. But sometimes I have found that the student may feel that it really doesn't matter. Life happens. One thing that I have emphasized with the students is to not avoid the problem of making your payment. There is help and it's ok to ask for it. But those that can help, can't if you don't give them a chance.
Perhaps the point could be stressed that all the effort of attending college will be to waste if a student defaults on his loan.
After all, the point in attending college is to graduate and get a job making more money than someone without a degree. More and more employers are checking credit on individuals as it measures their level of responsibility.
Most students do not realize many employers do credit checks. We are going to start stessing this to our potential students.
That is a great practice! Educating borrowers on how not paying back student loans can affect ALL aspects of their life helps prepare them for a better future.
You can try different things to get students to accept their responsibility but the bottom line is that not everything we do works on everyone. I always re-emphazise their obligations to students and even give them some real life examples. The main thing that I feel works best with them is the feeling they get that WE really care about them and their future. When I speak with them, I make sure they understand that ultimately it will be on them but that I care enough to help them through the borrowing process so that they fully understand their responsibility now so they will not have issues later.
One of the ways I have found to be effective in encouraging and obtaining a greater repayment is to discuss repeatedly and regularly with the student the value of their course work and where it will lead them. If they believe that the classes will lead to better jobs, better relationships and more skill and ability to function at a high level, they are motivated to pay. In essence they begin to see the value of their work and where it may lead them and thus the value of the loan and repayment.
That is a great relationship to build with the student. Helping them realize their dreams and supporting them on the way to being successful creates a positive experience for them. Having a good experience through your education will make the student realize the value of their education and the positive impact paying back their loans will have.
I think this is good point to emphasize that by not repaying their loan it may affect future employment. I really try to stress all the ways that being delinquent or defaulting on a student loan can affect the student.
Often time students don't look too far ahead into the future and I think it is great that you point that out to them. It is also important to point out the positive outcomes in repaying their student loans, for example, good credit so they may be able to purchase a car or a home in the future.
We need to keep our students involved and on top of their loans. Once they stop seeing that there is a loan out there, they sort of forget that they have payments to make and something is still outstanding. You need to keep them involved as long as possible.
Jetzebell,
It is so true that students tend to forget about the loans they take out after the disbursements, when tuition has been paid and they have spent any funds they have received directly. Reminding them of their borrowing responsiobilities throughout the in-school period helps ensure successful repayment.
Diana Mateer
I always talk to the students about how important is for them to be responsible with the loan and that they need to make plans before the start the program
