Future students in the University System of Maryland might be required to complete a workshop or class about student loan debt before their freshman year or at some other point after enrolling.
All USM institutions already offer some financial aid literacy training or counseling, but there’s great variation between schools in how those programs are delivered and what they cover. The vast majority are voluntary, but in light of skyrocketing student debt levels and the increasing cost of higher education, USM officials said it might be time for that to change.
“The whole idea is, we want students to understand what they’re getting themselves into, both immediately and long-term, when they take out a loan,” said Joann Boughman, USM’s senior vice chancellor for academic affairs.
A committee of the USM Board of Regents voted this week to approve a set of recommendations for how the system should approach financial aid, including strategies for minimizing Maryland students’ debt and advocating for more state aid.
One of those recommendations — which were all approved Tuesday by the Committee on Education Policy and Student Life (EPSL), and will be reviewed by the full board on June 27 — called for enhancing or establishing “financial aid literacy initiatives” at all system institutions.
“Financial aid literacy includes the full understanding of the impact financial decisions have on a student’s future, in addition to understanding the complexities of garnering financial aid,” according to the committee’s report, which builds on recommendations made in 2004 by the USM Financial Aid Task Force.
Another recommendation instructs system officials to study whether mandatory loan-debt education for students would be effective.
“The difference between the two recommendations is subtle, but from our perspective, it’s huge,” said Boughman, who helped compile the report.
“We can require certain [financial literacy programs] for students if we hand out financial aid to them, but when students start receiving loans from other sources, we have no real control over that. So the question is, how much can we require a student to do when we aren’t the one controlling the flow of those dollars?”
The issue of college affordability has become the topic of a national debate in recent years, as parents and students say that college has become more and more difficult to finance. With tuition and other fees increasing, and direct government support for higher education on the wane, loans often are the default choice for families to pay for school.
Seven in 10 college graduates last year had student loan debt, with the average borrower owing $29,400, according to The Project on Student Debt, a nonprofit interest group.
Boughman said USM staff will sit down with financial aid directors from each school to figure out how to incorporate more information about student loan debt into the existing process of securing financial aid. After a few months, they’ll report back to the board with a decision on whether mandatory loan-debt education makes sense.
Samim Manizade, a physics and engineering major who serves as the Board of Regents’ student member, said he thinks mandatory education would be “very helpful.”
“I could definitely see unscrupulous lenders taking advantage of misinformed students, which could potentially hurt the student who’s taking out the loan,” Manizade, 20, said. “I think it’s definitely an issue. Whenever you have uninformed students, you’re going to have scenarios where people get exploited or make unwise decisions that get them into financial trouble.”