The U.S. Education Department released new guidance on Monday on student loan counseling requirements and flexibility. The Dear Colleague Letter reminds institutions of ways that they can help students and their families make informed decisions about taking out student loans.
Colleges have pushed for legislation that would give them the ability to limit the borrowing of some students who they are concerned might be taking on more loans than they would be able to repay, Inside Higher Ed reported. The federal government penalizes colleges when large numbers of their former students who took out federal loans default on that debt.
The new guidance discusses the statutory and regulatory requirements for entrance counseling as well as the "significant flexibility" colleges have to provide loan counseling beyond what is required by federal law. It also, however, serves as a reminder that institutions cannot deny or limit an otherwise eligible student's access to Direct Loans, except by using except when the Higher Education Act allows an institution to use "professional judgement" to do so.
The guidance includes the announcement of a new counseling tool, including a repayment calculator, specific to parent PLUS Loan borrowers. The information will be available this summer, according to the letter.
Related Links
U.S. Education Department Dear Colleague Letter
http://www.ifap.ed.gov/dpcletters/GEN1506.html
Inside Higher Ed
https://www.insidehighered.com/quicktakes/2015/04/08/education-department-clarifies-loan-counseling-flexibility