Counseling Pilot Aims to Trim Student Debt

In hopes of ensuring that college students don’t assume too much debt in pursuing a degree, the U.S. Department of Education is launching a trial program to provide loan counseling to students while they’re still in school.

Students already receive some level of counseling when they first take out a loan and again when they leave or finish school and must start repayment. The federal program would see that students also get counseling in between, according to a report on TheStreet.com.

The goal of this new layer of face-to-face counseling would be, in part, to make sure each student is not taking on more loans than they could reasonably pay back, given their anticipated first job. A general rule of thumb is that loans should not total more than the average annual starting salary in the student’s field of study.

Colleges and universities that sign up for the trial program will randomly place students into two groups for comparison: those who get the extra loan counseling and those who receive the usual entrance and exit counseling.

“We’re keen to understand not only whether required loan counseling works, but what kind of loan counseling is most effective,” said Under Secretary of Education Ted Mitchell at the National Association of Financial Aid Administrators conference in Washington, D.C.

Take More Courses to Graduate Quicker

Debt has become a $1.3 trillion problem for college students. Taking more courses each semester could be part of the solution.

If students would just take on 15 course-credit hours instead of the traditional 12, the savings are estimated at nearly $13,000 for someone trying to earn a four-year degree, according to a report by the Community College Research Center at Columbia University. The study showed that Tennessee students who signed up for 15 course credits in their first semester paid 10%-20% less per degree in tuition and fees.

Completion rates for the 15-credit students rose as well, according to an article in The Atlantic. Those community college students were 6.4% more likely to earn a degree, while the same held true for 11% of four-year students.

The report noted that students who started their college careers by taking 15 credits had the same pass/fail rates as those with 12-credit terms. The research did find that students with lower high-school grade-point averages didn’t fare as well with the extra load.

The Columbia research reinforces the results of a 2012 study that showed part-time community college students were less likely to complete a degree than their full-time counterparts. It also confirmed the findings of the “15 to Finish” campaign, a program developed at the University of Hawai’i.

“Research shows that students with a full-time course load, meaning 15 credits per semester, who consistently enroll full-time are most likely to graduate,” Sen. Lamar Alexander (R-TN) said in an education committee hearing last year. “However, a 2013 survey of institutions showed the majority of so-called full-time college students are not taking the credits needed to finish in four years for a bachelor’s or two years for an associate degree.”

Most Students Avoid Too-Heavy Loan Debt

The higher-education affordability movement was triggered in part by concerns that students are digging themselves into a lifelong hole of debt by taking out loans to finance their studies. However, a new survey shows that hole may be fairly manageable for most students.

OnCampus Research, part of the NACS subsidiary indiCo, asked students about their current levels of loan debt and other financial matters. Overall, 39% of student respondents said they had accumulated no debt at all toward their education so far.

Students are more likely to take out loans in their upperclassman years after exhausting other sources of money. To compare, 46% of first-year students said they were debt-free while only 30% of fourth-year students could say the same. Many graduate students, despite facing higher tuition costs and possible debt left from their bachelor’s studies, are doing all right; 39% of them currently have zero debt from student loans.

Among students who have borrowed for their education, more than half are deferring payments until they graduate and can get a full-time job. The rest are paying at least a little while they’re still in school.

However, the amount of debt that most students are shouldering appears to be within acceptable boundaries, contrary to numerous news reports about a debt “crisis.” The rule of thumb, according to the federal Consumer Financial Protection Bureau, is that a student’s total loan debt should not exceed the annual salary the student could reasonably expect to earn in their particular field in the first year after graduation.

About a quarter of all students say they have less than $10,000 in educational debt and 21% have $10,000-$30,000. Only 6% have accumulated $50,000 or more in student-loan debt at this point and some of those are working on degrees in high-paying fields such as medicine, law, or engineering.