The phrase “knowledge is power” dates back to 1597, but when it comes to student loan debt, that phrase holds more truth than ever. With policies ever-changing after a 3-year payment pause, confusion and misconceptions about student loans abound (Source: washingtonpost.com).
One persistent source of confusion for students is the lack of clarity regarding their student loan repayment once they leave school. To address this issue, the College Cost Transparency Initiative (CCT) announced in September that more than 360 higher education institutions have committed to follow a set of principles and standards that ensure transparency and understanding around communicating student financial aid offers (Source: collegeprice.org).
Amidst this renewed call for student loan debt transparency, it’s crucial to revisit the significance of student debt letters. Sent by schools to their students, these letters provide personalized student loan summaries outlining what students have borrowed and what they're expected to repay once they leave school. They empower students to evaluate their financial situation, make informed decisions, and prepare for successful loan repayment through essential information about financial aid and college costs. In addition to helping students, student debt letters can help schools retain the students they’ve worked so hard to enroll.
Schools in some states are required to comply with individual state requirements for sending student indebtedness information. However, even when not required, communicating college cost information to students is still beneficial. The average federal student loan debt is more than $37,000 per borrower (Source: educationdata.org). But research shows students who receive debt letters graduate early and with less debt. A Federal Reserve study shows that a combination of debt letters and counseling can change student behavior related to borrowing and academic decisions (Source: federalreserve.gov).
There are many things to consider when planning for and implementing a debt letter. For example, is it better to build your own or is it more cost effective to purchase one? Are there specific state requirements to meet? As a busy higher education professional, it can be difficult to stay informed about the best practices for communicating indebtedness information with your students.
Fortunately, Attigo offers a solution to keep borrowers well-informed about their debt while making it easy for you to provide the correspondence you need to achieve your goals. We can help you help your students understand the long-term commitment required for repayment success while ensuring compliance with state requirements where applicable.
For a more in-depth understanding of debt letters, explore our Definitive Guide to Debt Letters.