Colleges offering students and parents an education on the price of rising debt
Campus requisite: lessons in loans
May 3, 2013 4:30 AM
Students in advanced jazz warm up before class in Point Park University's new George Rowland White Dance Studio Two, Downtown.
By Tim Grant Pittsburgh Post-Gazette
In the freshman orientation process at Slippery Rock University, students are required to attend a series of seminars on campus life and academic expectations. But they also get a heavy dose of lectures on how student loans work and why they should only borrow what they really need.
"We have always stressed the importance of limiting college debt," said Karl Schwab, a public relations representative at Slippery Rock. "Financial aid staff also conducts meetings [the first weekend] with the new students and their parents urging them to cancel any loans or portions of loans they don't need so as to reduce their overall borrowing."
He said follow-up sessions with students are held throughout the year by financial aid representatives. The goal is to track the students' academic progress, remind them about their loan obligations and offer counseling on their spending habits and budgeting practices.
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While efforts to educate students and parents on the wise use of debt varies from college to college, the student loan process has in general become more transparent as colleges are held more accountable for keeping loan default rates below a certain level.
Student debt has reached a point where Americans now owe more on college loans than they do on automobile loans or credit cards. Total college debt shot past $1 trillion last year and continues to head higher. Unlike credit card debt and car loans, student debt is all but impossible to eliminate, even after declaring bankruptcy.
U.S. Sens. Barbara Mukulski, D-Md., and Tom Harkin, D-Iowa, recently introduced a bill to empower and protect student loan borrowers with better college loan counseling at colleges through the Smarter Borrowing Act.
The legislation strengthens and reforms the current mandatory entrance and exit loan counseling requirements for federal student loans, and notifies students annually of their cumulative debt, including their remaining eligibility for loans and grants.
The bill also requires high-risk institutions, such as for-profit colleges, to provide additional counseling.
Mark Kantrowitz, a Cranberry resident and publisher of two leading websites on planning and paying for college -- FinAid.org and Fastweb.com -- said student debt is a big topic of discussion at Financial Aid Administrator conferences. Workshops on financial literacy training and debt counseling are very popular at the events.
"So many colleges are now considering what they can do to help students make smarter borrowing decisions," Mr. Kantrowitz said. "There are many initiatives at individual colleges to address the growing student debt crisis, but these programs are still in their infancy stages.
"I think these initiatives are a step in the right direction, but much more needs to be done, not just when students arrive on campus," he said. "The education on student debt and financial literacy counseling should be part of the high school curriculum."