Tip of the Week
For student loan borrowers – finding the possible in what seems impossible
She faced what she felt was an impossible situation.
The recent graduate found a decent job and was making enough money to pay her living expenses but then she received notice of her student loan payment amount.
Looking at the notice, she was overwhelmed. The amount was more than she could afford. Unaware of her options and afraid to call her servicer, she put off dealing with it or even trying to start repayment.
This situation – which is a real borrower, by the way – is probably replicated thousands of times for borrowers across the country. Yes, in theory, they have received information about their loans. However, at the time, they were probably more concerned with other obligations, like completing their education, finding a job, or taking care of family.
And now, schools, colleges and universities across the country face their own overwhelming situation – lowering their student loan borrower nonpayment rates and cohort default rates.
For an institution, access to federal student aid for future students is at risk when the cohort default rate (CDR) is 30 percent or higher in a single year. While the nonpayment rate is different than the CDR, the Department said in a February 18 announcement “such rates are indicative of both institutions’ success in counseling borrowers on the impact and potential consequences associated with their student loan debt, as well as the extent to which institutions may be at risk of losing access to federal student assistance due to high CDRs in the future.”
Outreach and communication will play a critical role in helping borrowers. Mapping Your Future works with institutions and organizations to develop communication and assistance strategies for borrowers, including free resources.
This borrower, who had put off repayment, fortunately had a friend who knew there were options available for her. With just a few minutes of counseling, she was enrolled in a repayment plan she could afford and out of risk of default.
Now in control of her student loans, she felt so much more was possible.
For more information, contact Mapping Your Future at feedback@mappingyourfuture.org or 1-800-374-4072.
