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What Would Effective Counseling for At Risk Student Loan Borrowers Look LIke?

posted by david lander

As the CFPB and Department of Education and others struggle with how best to provide effective help to at risk student loan borrowers, here is one example of a program that provided these services. For full disclosure I am the chair of the advisory committee of the organization that oversaw and funded the project.

The Center for Excellence in Financial Counseling (“CEFC”) at the University of Missouri St Louis was founded and funded to develop ways to improve the quality of education and counseling for consumers in financial distress. For its first program, the organization has been exploring ways to help consumers who are at risk on the repayment of student loans. This is the first such program in the country and CEFC is encouraged about the results thus far and for the prospects going forward.

During the first stage of this program, CEFC worked with the National Consumer Law Center to train nearly 400 counselors how to diagnose and implement solutions for consumers with defaulted student loans. Once it became clear that this effort required more follow-up oversight and quality control with the trainees and their employers, CEFC implemented the second stage of the program to combine the training with program reporting and quality control. When it became further apparent that an even more comprehensive approach would lead to better results, CEFC implemented a third stage, which provided intensive training in both the technical aspects of distressed student loans and behavior-change counseling techniques. This included an intensive program of post-counseling borrower follow-up, monitoring implementation of program protocol, and third-party evaluation. Program training and counseling materials were developed and provided under contract by the National Consumer Law Center and the Counseling and Family Therapy Department at the University of Missouri-St. Louis. In addition, each financial counseling provider was paired with a legal services provider so that the borrowers who needed legal help could be referred to a lawyer with student loan knowledge, expertise and a commitment to help.

In the third stage of the program, CEFC contracted with three first-rate providers of general financial and credit counseling and education services. Each of these providers contracted with a legal services partner to fully implement the program. A total of 626 student loan borrowers were helped.

Program Features

The program has several innovations that set it apart from the way that financial and credit counseling services have been delivered historically, including:

  • An emphasis on scheduled follow-up counseling sessions;
  • a combined emphasis on diagnosis, education, and behavior-change elements;
  • a contractual relationship with a legal service provider that has expertise in the student loan area;
  • close monitoring for implementing program protocol for quality control; and
  • professional third-party evaluation.

CEFC provided monthly and performance-based stipends to the three partnered service providers during the third stage of the enterprise. Starting January 1, 2014, CEFC and two of these direct providers and their respective legal services partners have contracted to continue the program for 12 additional months. Extensive external evaluations were an integral part of the program.

A number of credit counseling agencies are lining up to begin student loan counseling; it is essential that they implement and maintain the extensive training, monitoring and evaluation and high levels of quality control that are necessary for an effective program as well as the capacity to have multiple sessions with a high percentage of the indebted borrowers. This is the first program that has made contracted counsel available to the client and that seems to be especially important in this complicated arena.


This appears to target loans already defaulted. Are there any effective counseling programs on the front end - before the student commits to a student loan and an institution? Or while a student is going to school? Or after the student graduates and before the loan defaults?

The counseling needs done at the front end and needs to start with the following two questions: "What course of study are you going to use this loan for? How is that going to generate revenue to live on AND service this loan?" Current intake "counseling" is a farce.

First off, I want to congratulate the University of Missouri at St. Louis for starting this program. There is a need for a new profession dedicated to solving consumer financial problems. Such a professional degree would require knowledge of consumer law, collection law, accounting, budgeting, family therapy, student loans, addiction counseling, personal counseling and economics. I think such a career could be very rewarding personally and financially. There really is no occupation in existence to refer clients to who need "financial therapy." I can envision a private practice that utilizes annual financial "checkups", financial coaching, basic retirement planning, big purchase counseling, debt elimination programs, etc. We need a new profession that can pull together the wisdom of many disciplines--a financial coach for the average consumer. There is a real career opportunity here. We just need to give it a name and a degree.

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