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Inspiring Responsible Borrowing

I can hear my father’s voice in my head: “Get a job while you’re in college. I paid off my whole year’s tuition with the earnings from my summer job!”

I felt inspired at the time, but it was not long before I realized how much times had changed and reality hit me hard. I borrowed conservatively at first to cover my bill, but even with a part-time on-campus job, I was barely able to afford some basic living expenses. So I borrowed more, and then later even more. Six months after graduating I received quite the shock.

We know that this story is all too common. So how do we better prepare students to make wise decisions before it’s too late? Here are a few tips to help inspire your students to borrow responsibly:

  • Direct vs. indirect costs. Ensure that all estimated costs are on the Award Letter and are clear. Break out direct costs (i.e. tuition and fees) from indirect costs (i.e. books) so that students can easily understand the difference between what will be owed to the school and what they will need to plan for on their own.
  • Integrate institutional aid. When students are awarded institutional aid separately from federal and state aid, they often borrow too much and don’t adjust their loan amount at a later time. Align your scholarship application process with the FAFSA timeline so that you can place any awarded institutional aid on the same Award Letter.
  • Include repayment information. Get students thinking early-on about average salaries in their field of choice and how their monthly loan payments will interact with their post-graduation budget. By integrating and/or linking repayment information right into the Award Letter, students are more likely to give repayment some thought before taking out student loans.In the end, don’t overthink your efforts with debt education. Even small steps towards educating students in this area will have positive effects with inspiring them to borrow responsibly.

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