Table E: Debt Management

Table E: Debt Management

Student Aid Partner # SDI Recommendations What happened?

Schools 1   Require one hour credit course in debt management/personal finance. Not adopted although some schools offer this.

2
Provide a compiled listing to students of all financial aid received. Add rights and responsibilities.
This is the award notice and is required by academic year. TG's grduate letters list all loans received.

3
Discuss student loans at career days - invite lenders.
Common practice.

4
Include success stories at exit interview.
Practices vary.

5
Provide student with a folder at initial contact to encourage accurate record keeping and reinforce the seriousness involved in borrowing money.
Practices vary.

6
Involve student in collection efforts.
More information is needed.

7
Provide debt management brochures all over campus.
Practices vary.

Lenders
1
Provide information to borrowers concerning selling practices, deferments, forbearance, contact person, etc.
1992 Amendments-Regulations detail when borrowers need to be notified of sale or transfer. Deferment and forbearance information is available on Adventures in Education under Managing Debt-Postponing Student Loan Payments. Lenders send deferment and forbearance information in some letters to borrowers.

2
Allow mandatory merging of student loans at borrower request.
Not adopted, although students consolidate their loans.

3
Provide electronic fund transfer availability.
This is common practice.

4
Participate in the preloan/exit sessions at the schools.
Lenders are doing this.

5
No penalty for consolidation.
Federal legislation in 1993 required lenders to offer Consolidation loans to borrowers with the options of repaying their loans with graduated or income sensitive repayment options. 1997 Emergency Consolidation Loan Act improved the terms to students for this option.

6
Assuming student liability by parent at no penalty of rate.
Not adopted.

7
Provide GSL line of credit/credit card.
The Master Promissory Note is in progress. FFEL submitted to ED in 1996; 1999-2000 implementation expected.

8
Require multiple cosigners.
Not adopted.

9
Perform credit checks prior to loan award on GSL.
Some schools do this at this time if it is done for default prevention purposes.

10
Provide a resume of policies and procedures to schools and borrowers.
Schools have access to policy manuals, specifically, the Common Manual.

11
Provide student with a 12-month payment booklet. After those payments have been made, provide borrower with a status report and new payment booklet.
Many lenders provide a 12 month payment coupon book; a new one is provided each year.

Legislative
1
Require at least one payment while student is in school.
Not adopted.

2
Require mandatory consolidation participation.
Legislation addressed consolidation, however somewhat differently than the SDI recommendation. In January 1993, the Federal government allowed married couples to consolidate their loans into one single Consolidation loan. July 1994 Federal legislation further gave borrowers incentive to engage in loan consolidation by lifting a minimum loan amount for loan consolidations.

3
Give financial aid office the authority to JUST SAY “NO”!
This is done on a case by case basis; school must document why and inform the student.

4
This is done on a case by case basis; school must document why and inform the student.
Schools can access NSLDS on behalf of the student.

5
National database.
NSLDS

6
Require multiple cosigners.
Not adopted.

7
Create incentive plan for good payments.
Some lenders give borrowers a break/reward if every payment for a certain amount of time is made in a timely manner.

Table E: Debt Management
Student Aid Partner	#	SDI Recommendations	What happened?

Schools	1	Require one hour credit course in debt management/personal finance.	Not adopted although some schools offer this.
	2	Provide a compiled listing to students of all financial aid received. Add rights and responsibilities.	This is the award notice and is required by academic year. TG's grduate letters list all loans received.
	3	Discuss student loans at career days - invite lenders.	Common practice.
	4	Include success stories at exit interview.	Practices vary.
	5	Provide student with a folder at initial contact to encourage accurate record keeping and reinforce the seriousness involved in borrowing money.	Practices vary.
	6	Involve student in collection efforts.	More information is needed.
	7	Provide debt management brochures all over campus.	Practices vary.
Lenders	1	Provide information to borrowers concerning selling practices, deferments, forbearance, contact person, etc.	1992 Amendments-Regulations detail when borrowers need to be notified of sale or transfer. Deferment and forbearance information is available on Adventures in Education under Managing Debt-Postponing Student Loan Payments. Lenders send deferment and forbearance information in some letters to borrowers.
	2	Allow mandatory merging of student loans at borrower request.	Not adopted, although students consolidate their loans.
	3	Provide electronic fund transfer availability.	This is common practice.
	4	Participate in the preloan/exit sessions at the schools.	Lenders are doing this.
	5	No penalty for consolidation.	Federal legislation in 1993 required lenders to offer Consolidation loans to borrowers with the options of repaying their loans with graduated or income sensitive repayment options. 1997 Emergency Consolidation Loan Act improved the terms to students for this option.
	6	Assuming student liability by parent at no penalty of rate.	Not adopted.
	7	Provide GSL line of credit/credit card.	The Master Promissory Note is in progress. FFEL submitted to ED in 1996; 1999-2000 implementation expected.
	8	Require multiple cosigners.	Not adopted.
	9	Perform credit checks prior to loan award on GSL.	Some schools do this at this time if it is done for default prevention purposes.
	10	Provide a resume of policies and procedures to schools and borrowers.	Schools have access to policy manuals, specifically, the Common Manual.
	11	Provide student with a 12-month payment booklet. After those payments have been made, provide borrower with a status report and new payment booklet.	Many lenders provide a 12 month payment coupon book; a new one is provided each year.
Legislative	1	Require at least one payment while student is in school.	Not adopted.
	2	Require mandatory consolidation participation.	Legislation addressed consolidation, however somewhat differently than the SDI recommendation. In January 1993, the Federal government allowed married couples to consolidate their loans into one single Consolidation loan. July 1994 Federal legislation further gave borrowers incentive to engage in loan consolidation by lifting a minimum loan amount for loan consolidations.
	3	Give financial aid office the authority to JUST SAY “NO”!	This is done on a case by case basis; school must document why and inform the student.
	4	This is done on a case by case basis; school must document why and inform the student.	Schools can access NSLDS on behalf of the student.
	5	National database.	NSLDS
	6	Require multiple cosigners.	Not adopted.
	7	Create incentive plan for good payments.	Some lenders give borrowers a break/reward if every payment for a certain amount of time is made in a timely manner.