The Student Experience of Student Loan Counseling

Transcription

1 The Student Experience of Student Loan Counseling Preliminary Results of an Ongoing Study September 30, 2014 Carla Fletcher Senior Research Analyst, Research and Analytical Services Outline Policy climate Legislative and regulatory history Research literature review Student observations Evidence-based best practices Next steps 1

2 Outline Policy climate Legislative and regulatory history Research literature review Student observations Evidence-based best practices Next steps Policy Climate Student debt burden matters Harsh consequences for poor decisions The president takes executive action Congressional legislation 2

3 Outline Policy climate Legislative and regulatory history Research literature review Student observations Evidence-based best practices Next steps Legislative and Regulatory History of Loan Counseling (1986) Higher Education Act (HEA) Amendments Was first statutory mandate for exit counseling (1989) ED s Student Loan Default Reduction Initiative Added required entrance counseling and specified information to share (1998) HEA Amendments Clarified that electronic means were ok for exit counseling (2000) ED Regulations Required explanation of MPN, consequences of default, and mandatory repayment in entrance counseling 3

4 Legislative and Regulatory History of Loan Counseling (cont.) (2008) Higher Education Opportunity Act Promoted the use of interactive programs for counseling Clarified that lenders could provide counseling for schools Added entrance counseling requirements into statute Required new information in entrance and exit counseling (2010) ED Regulations Stated that online programs were an effective means for delivering counseling (2012) ED redesigns the online counseling tool to add interactive features like calculators and (limited) personalized information Outline Policy climate Legislative and regulatory history Research literature review Student observations Evidence-based best practices Next steps 4

5 Literature Review Student Comprehension Gaps in knowledge Failure to recall undergoing exit counseling Failure to recall interest rates and repayment terms Shock at amount owed Delivery Method Face-to-face more effective than web in health FA staff report face-to-face superior, expensive Students prefer counseling tailored to them Literature Review Timing Entrance counseling occurs when students are most distracted, but schools have most leverage Exit counseling occurs after students can rectify their situations Just-in-time counseling can be especially effective Complexity and Volume of Information Poor decisions arise from long and complex forms Cognitive overload Drawing money from future income is challenging 5

6 Outline Policy climate Legislative and regulatory history Research literature review Student observations Evidence-based best practices Next steps Current Title IV Loan Counseling Dominated by ED s online tools (free, scalable, legal) 70% utilization among financial aid offices 90% of offices in budget crunch cut face-to-face first No theoretical or practical evidence on effectiveness among actual users All student borrowers are required to receive loan counseling when they first borrow federal student loans and when they leave school, but little is known about the effectiveness of these programs. The White House (6/9/2014) 6

7 Exploring Effectiveness: The Research Design user experience tests Actual borrowers doing the actual counseling About half exit counseling, half entrance Accompanied by surveys 8-12 schools Diversity of sector, region, gender, age, race, parent s education, level of financial literacy, and financial aid awareness User Experience Testing (UX) Qualitative research method Identify issues and areas for improvement Full spectrum of issues: major and minor; technical and verbal; specific and abstract How users react and why Assess student feedback to induce/derive principles of effective counseling materials 7

8 UX in Practice 2:1 sessions 1 st survey: knowledge and info priorities Discovery interview Counseling module Spontaneous actions and feedback Prompts to encourage elaboration Assistance if student gets lost 2 nd survey: overall reactions, satisfaction Debriefing ED s Exit Counseling Studentloans.gov Tools and Resources Counseling demo Exit counseling 8

9 ED s Exit Counseling Studentloans.gov Tools and Resources Counseling demo Exit counseling ED s Exit Counseling Studentloans.gov Tools and Resources Counseling demo Exit counseling 9

10 ED s Exit Counseling Studentloans.gov Tools and Resources Counseling demo Exit counseling Some Positive Themes from Exit Counseling Students take this seriously: begin with full tanks Info often unhelpful but good to know They know the basics and want specifics Optimistic about repayment They like the interactive elements They like auto-population and logic Most understand importance of servicer Framing implication: make it about their money 10

11 The Skip Dynamic 1.Uniform high importance Meticulous reading Irrelevant material Inattention, uniform devaluation Skimming 2.Skimming Selective reading Lack of differentiation, inattention Incorrect skipping 3.Skipping the important not so bad because: Reliance on servicer or search as issues arise Questions= the crucial parts Literal Trivia 11

12 Literal Trivia Literal Trivia 12

13 Other Negative Themes Lack of introductory guidance for counseling or repayment Order of elements, especially (but not only) the video Seems bulky, text-heavy Superfluous information/lack of customization Inapplicable information Already known information Not neutral; actively harmful Redundancy breeds resentment Simple Specifics for Counselors Background/introductory information YouTube link first Servicer contact information Budget tool: importance and interpretation IDR framing Complication and inflexibility Suboptimal difference (non- Standard ) Agnosticism of the material Conflict of interest Information is not counseling 13

14 Preliminary Notes from Entrance Counseling Same level of complexity as exit, even though students are at a very different point in time Timing can create a beginning of the semester madhouse Students need to bring certain pieces of information to get the most out of the counseling Calculators are problematic Similar Themes Students like practical information, especially when it s specific to them Text heavy; information overload Lack of introductory guidance Skimming and skipping 14

15 Outline Policy climate Legislative and regulatory history Research literature review Student observations Evidence-based best practices Next steps Best Practices: Goals Inventory the diversity of approaches used by schools that are advancing beyond minimum requirements Assess the efficacy of these approaches Better understand the obstacles and opportunities facing schools Make recommendations for practitioners and policymakers 15

16 Best Practices: Schools Selected Baldwin Wallace University Broward College El Paso Community College Northern Virginia Community College Ohio State University SUNY College of Environmental Science and Forestry University of South Florida Western Technical College Best Practices: Schools Selected Baldwin Wallace University Broward College El Paso Community College Northern Virginia Community College Ohio State University SUNY College of Environmental Science and Forestry University of South Florida Western Technical College 16

17 Outline Policy climate Legislative and regulatory history Research literature review Student observations Evidence-based best practices Next steps Next Steps First report will be on legislative history and literature review (fall) Second report will be on borrower observations from the exit counseling (fall) Third report will be on borrower observations from the entrance counseling (winter) Fourth report will be on best practices (winter) 17

18 Look for these reports at Carla Fletcher Senior Research Analyst Research and Analytical Services, TG Jeff Webster Assistant Vice President Research and Analytical Services, TG 2014 TG To order additional copies, or to request permission to reproduce any of the information provided, please call TG Communications at (800) , ext