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Financial literacy to the rescue: Teaching students what they owe before they owe it

American Student Assistance’s SALT program helps Indiana students manage their debt.
University Business, June 2012

Jack Gochenaur was hearing scary stories around campus. Some financial aid students didn't know whether they'd received loans or grants to pay for their education. Many had no idea what they'd need to earn to meet their monthly loan payments.

"I have students who reach their senior year and during exit counseling, it's the first time they know how much money they owe," said Gochenaur, Chief Financial Officer/Treasurer of Manchester College, a 1,300-student liberal arts college in North Manchester, Indiana.

Something, he realized, had to change.

He was already using loan counselors from the nonprofit American Student Assistance® (ASA) as consultants to help students manage their debt. The school offered a popular financial responsibility course. And the college president was trying to reach students with monthly seminars on personal finance. But Gochenaur still didn't have enough lifesavers to protect his graduates from drowning in debt. Then he heard about SALT.

SALT, a new ASA® program, offers education debt management and financial literacy to current students and alumni through in-person and online encounters. By subscribing to SALT and encouraging students to sign up, educators provide proactive communication about student loan repayment options; one-on-one repayment counseling; a personalized online dashboard to track all federal and private student loans in one place and to compare payment options; a highly interactive web financial education curriculum; multiple "self-serve" web tools and calculators to assist with budgeting; in-person group financial education training at their higher education institution; and advocacy and assistance with resolving complex student loan-related problems.

"Now they have the opportunity to have a free, interactive website, access to loan counselors and finance 101-type courses," Gochenaur said.

Manchester is one of 55 schools that have started using SALT since it launched in December 2011. A campus-wide kick-off in the spring included sessions to introduce students to the website and the services it provides. After hearing from professionals and from three of the 30 Manchester students who beta-tested the program, attendees were encouraged to register for SALT using computers set up outside the event or their iPhones. The following day, tables explaining SALT were set up in the highly trafficked student union. SALT will also be introduced to incoming freshmen during summer orientation sessions.

Among the benefits Gochenaur expects will open students' eyes: finally being able to see how their loans are adding up.

"I think it's extremely easy for students to go on the Internet and apply for loans semester after semester. They borrow the maximum, but don't really aggregate it in any way."

To combat that problem, SALT allows students to record every loan they take out, so it's calculated into their debt load.

Gochenaur expects students using SALT to start changing their plans and behaviors, as those who have taken the school's financial responsibility class have. Some of those students told him they've decided to tackle student loan debt by living with their parents after graduation so they can funnel earnings into loan payments instead of rent. He anticipates SALT inspiring similar practical steps.

"All schools are facing an increasing default rate. If we can help our students learn what borrowing involves and what options they have concerning loan consolidation, everyone will benefit," Gochenaur said.

For more information please visit SCHOOLS.SALTMONEY.ORG/UB.