Effective Student Loan Counseling: Chapter Three

Effective Counseling Series

Betsy Mayotte, President | The Institute of Student Loan Advisors (TISLA)

Chapter 3: Effective Counseling Techniques

This article is the last in a series of three created for Iron Bridge Resources that will focus on ways your institution can improve student loan counseling.

In our first article we shared the data that shows that basic entrance and exit counseling is largely ineffective, with 40% of borrowers stating they don’t remember receiving the counseling at all. We also discussed the increased importance for a school’s bottom line and reputation to ensure that their students have the tools they need to successfully manage their student loan debt.

In our second article we discussed when exactly is the “right time” to provide student loan borrowers the counseling they need. Providing this information at the right time is the best way to ensure that such information is useful and has a positive impact on the borrower’s repayment strategies and outcomes.
In this article we will illustrate some effective techniques for ensuring the counseling you provide is effective and catches the attention of your audience.

Framing a Reasonable Outcome

One of the most effective things we as an industry can do to increase the effectiveness of our loan counseling is to throw out our current goal post. I, like many of you, have been working in this industry for decades – and it has taken me that long to learn everything I know about student loans. Meanwhile, we’re expecting student loan borrowers to learn it all in a thirty-minute counseling session.

We need to stop trying to get borrowers to remember hundreds of pages of regulations, but instead get them to remember where to go to find the information they need when they need it. Think about the most annoying commercial you can think of. I bet you change the radio or TV station within two or three notes of hearing that commercials jingle. But I also bet you know the phone number or website of that company by heart. This is the technique we need to adopt when it comes to counseling.
So when you’re developing your counseling, consider what success looks like. For most of us, success is ensuring borrowers have the tools they need to manage their student debt. Our approach so far has been to try to get them to carry all of those tools at once, all the time. Instead we should be ensuring they know where the toolbox is for when they need it.

Of course, that doesn’t mean just throwing www.studentloans.gov up on PowerPoint slide and sending them on their way. You need to let consumers know what options are out there, so they know what kinds of tools are in the box. But repeating that website and other robust

resources throughout your counseling is a good way to make sure that if they remember nothing else, your audience remembers where to go to find their student loan toolbox.

Play to Your Audience

To do that you have to know your audience. Assuming your student loan borrowers are all early 20-somethings is going to leave a large chunk of your borrowers underserved and uninterested. The majority of borrowers that reach out to TISLA are between 25 and 45 years old. In 2018, 7.6 million of the estimated 19.9 million college students were over the age of 25. That’s almost 40%. A quarter of all student loan borrowers today are over the age of 45 and the fastest growing age group are the over 65’s.
Each of these generations learns in very different ways. Here are some basics to keep in mind:

Baby Boomers
 Place importance in accuracy to detail and ease of use
 Consume printed materials but also still actively online (and will keep rising)
 Simplified design – want to find out information easily
 Primarily desktop-driven or tablet driven (less mobile)

So for this group, you will want to provide more guides and longer texts. They want detailed resources and respond well to testimonials from other consumers in their age groups. This audience is more likely to watch a thirty minute video.

Generation X
 Enjoy clear and concise information
 Mixture of mobile, tablet and desktop consumption
 Enjoy comparisons and reviews/ testimonials

You’ve got to tighten things up a bit for the 35-50 year old age group – but not too much. They will also watch a longer video if they have to, but they want to see more blogs and articles that have a bit more detail, but not as much as an entire guide or book would have. Keep your counseling thorough but limited to one topic at a time and you’ll get this group’s attention.

Millennials aka Generation Y
 Large internet users and can regularly multi-task so content needs to be attention grabbing
 React to incentives and offers
 Brevity is key – want information quickly
 Mobile driven (and tablet use)
 Articles or written content should be short and concise
 Imagery driven

If you’re using videos for this group – keep it short and sweet. No more than five minutes and that’s pushing it. Gamification can be an effective strategy if you’re trying to increase participation with these consumers. Shorter blogs, checklists and stories from other people in their situation are all effective tools for this group.

If you’re providing counseling for teens or younger, also known as the iGeneration or Generation Z, imagery, such as photos or memes are popular. They also prefer interactive content such as quizzes, especially if they can share their results later.

Case Study Based Counseling
Regardless of the age group you are working with, providing the counseling in a case study format rather than just a list of rules or facts is a much more effective way of helping the audience understand and absorb the information.

Case study-based counseling forces the user to interact with the content, which improves the chances of them remembering it. There was a reason we require students to do homework. The listening starts the learning process, but the doing cements it.

Here’s a simple example of case-based counseling:
“Sam must borrow $10K in student loans every year for his four-year degree. What will his payments be once he leaves school? What will his payments be under REPAYE if his AGI is 25,000 and his family size is 1? How much in total will he pay under each repayment plan? How much will Sam pay in interest under each plan?”

This is much more effective than simply telling a student that they will owe $40K once they finish school which will result in a payment of $500 a month.

There are many techniques out there that can improve the impact of your student loan counseling. What we’ve presented in this article series are what we have found to be the most effective in hopes that they provide you with the building blocks to create your own, customized and effective program.