Evaluations of Federal Financial Aid Information and Delivery Strategies: An Experiment Requiring Additional Loan Counseling for Student Borrowers

Roughly two out of three students take out loans to pay for college, requiring them to make consequential decisions about how much to borrow and which type of loans. But many students lack the financial knowledge and skills to make good choices, underscored by the more than 500,000 who default on their loans each year. Colleges can only require federal loan borrowers to complete short, one-time counseling before receiving their loans ("entrance") and when they leave school ("exit"). To help these borrowers manage their debt, the Office of Federal Student Aid (FSA), under the Experimental Sites Initiative authorized by section 487A(b) of the Higher Education Act of 1965, allowed colleges to require student borrowers to participate in additional annual loan counseling in the years between the already-mandated entrance and exit counseling. The Institute of Education Sciences was to have assessed the effectiveness of these waivers on students' borrowing and college progress and, later, loan repayment.