ERIC Number: EJ794119
Record Type: Journal
Publication Date: 2008-May-2
Reference Count: 0
Colleges Should Teach Students How to Borrow Wisely
Holtschneider, Dennis H.
Chronicle of Higher Education, v54 n34 pB34 May 2008
The student-loan industry seems to have broken new ground, which raises a red flag after the recent investigation of the private-loan industry by Andrew M. Cuomo, New York State's attorney general. Last June "The Chronicle" reported that in Cuomo's testimony before Congress, he compared the industry to the Wild West, characterizing it as a bastion of bad practices. Exacerbating the situation, he contended, was the fact that agencies charged with protecting borrowers had failed to halt deceptive marketing and other practices detrimental to students' pocketbooks. Although Cuomo's investigation also exposed a number of colleges whose staff members had received personal benefits from lenders on the colleges' "preferred" lists, only a small number of colleges were involved--and many that did have undisclosed revenue-sharing agreements had put the money back into programs that benefited students. Most colleges have students' best interests at heart when counseling them about paying for their education. Marketing loans directly to students cuts the college out of the transaction and leaves students at the mercy of aggressive lenders. In this article, the author (who is the president of DePaul University) discusses what colleges should do to help their students get a fair deal and to make them aware about the risks of direct-to-consumer student loans. He suggests that, in order to lay a foundation of knowledge, colleges need to: (1) Enhance counseling in financial-aid departments, making special efforts to educate students about how they can fill financial gaps; (2) Provide tip sheets and FAQ's to students and their parents about navigating the private-lending environment successfully; (3) Create or expand "financial fitness" programs to pump up students' financial-planning skills and improve money management through financial-literacy initiatives and workshops in which students can deal with their personal financial affairs, including credit-card debt; (4) Engage academicand faculty advisers who understand the tightly intertwined nature of students' academic, career, and financial planning; (5) Limit tuition increases for sophomores, juniors, and seniors so they do not drop out for financial reasons and can make long-range plans for financing their education, rather than scrambling at the last moment to secure additional loans when tuition rises; and (6) Advocate strong oversight of the student-loan industry and colleges' participation in it.
Descriptors: Investigations, Student Loan Programs, Industry, Marketing, Student Financial Aid, Money Management, Ethics, Credit (Finance), Educational Finance, School Role
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Publication Type: Journal Articles; Opinion Papers
Education Level: Higher Education
Authoring Institution: N/A