New Federal Loan Counseling Experiment

December 15, 2016

The Department of Education Thursday announced an experiment to find the best loan counseling services for student borrowers.

The department asked 35 public two-year and 14 public four-year institutions to test the effectiveness of required loan counseling for student borrowers. The announcement follows remarks from Under Secretary Ted Mitchell over the summer that the department was considering giving a handful of institutions the ability to require loan counseling using its experimental sites authority. Mitchell told attendees at the National Association of Student Financial Aid Administrators conference that the department wants to understand not just whether required loan counseling is effective but what kind of counseling is most effective -- whether that means in-person counseling or regular electronic communication.

The department has advised colleges and university financial aid offices that after completing entrance counseling they cannot require students to receive further guidance as a condition of taking out additional federal direct student loans.

Half of the 100,000 students participating in the experiment at the invited institutions will be placed in control groups, while another half will be assigned to receive additional forms of counseling chosen by the institution, according to a release from the department.

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