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The Department of Education today released details of a pilot program announced last month that will allow some institutions to require loan counseling for student borrowers.
The pilot program, developed through the department's experimental sites authority, is designed to test the effectiveness of more flexible loan counseling for those borrowers. College students who take out federal loans are required to receive counseling when they take out the loan and again when they go into repayment, but not in between -- a source of complaints from financial aid administrators.
Institutions selected for the pilot may choose one of three loan counseling approaches, according to a release from the Department of Education: the department's counseling tool, a third-party counseling service or tool, or counseling developed by the institution itself that meets minimum requirements. Each of those colleges or universities will require a randomly selected group of student borrowers to go through the chosen counseling program once in an academic year. That group will be compared to a control group of student borrowers who receive only the entrance and exit loan counseling already required.
Colleges or universities interested in applying to participate in the pilot program must demonstrate that the added loan counseling does not impede borrowing students need to pay for college and must disclose to all borrowers that they are participating in the program, among other requirements.
