Innovative Financial Literacy Tool Educates College Students about Overborrowing, Provides Personalized Action Plan to Reduce Indebtedness |(DES MOINES) ó Today, Gov. Terry E. Branstad introduced “Student Loan Game Plan,” a unique online resource created by Iowa Student Loan® that helps students understand how overborrowing to pay for college can affect their financial future. The innovative online educational resource provides student loan applicants with personalized real-time results about how their borrowing decisions today will affect their lifestyle after graduation. The online feature touts a tagline of “Your Choices. Your Success.” and gives students immediate suggestions on ways they can reduce their expenses and education loan indebtedness.
“Financial literacy is important at all levels of a person’s education,” said Gov. Branstad. “This unique learning tool created by Iowa Student Loan helps students tackle their education loan indebtedness, so that they can graduate and successfully contribute to Iowa’s future economy.”
“Student Loan Game Plan” is the result of an initiative recommended by the Iowa Student Loan board of directors’ Student Indebtedness Task Force, which was formed to review factors that contribute to increased student loan indebtedness levels at Iowa colleges and universities. After more than a year of analysis and development, the online feature was integrated in December into applications for all private student loans owned or serviced by Iowa Student Loan.
“As the state’s nonprofit secondary market, our mission is to help students and families obtain the resources necessary to succeed in college,” said Tim Bottaro, Iowa Student Loan board chairman. “A keyword of that mission is ‘necessary.’ We are focused on ensuring students borrow only what they need. And oftentimes, education is the best first step to accomplish this.”
Iowa Student Loan’s responsible borrowing feature is unique in that it is:
Specifically targeted at students entering and attending college and their parents/cosigners of loans.
Required of anyone applying for a private student loan owned or serviced by the nonprofit organization.
Designed to provide real-time results at the critical time when students are requesting a loan.
Developed to be interactive by providing students with a personalized action plan and tangible suggestions to reduce their expenses and education loan indebtedness.
Fully funded by Iowa Student Loan, which does not receive any state appropriations.
As part of Iowa Student Loan’s “Student Loan Game Plan,” students must progress through a series of interactive screens that ask them to input their requested loan amount and their anticipated future career as well as their estimated past, present and future student loan amounts. From this information, their debt-to-income ratio is revealed. This ratio is explained to them as a measurement that can indicate future financial challenges. Applicants are also warned about the serious financial obligation of taking on student loans. Finally, they are walked through an estimated budget and a variety of immediate ways to reduce their expenses in hopes they can reduce their need to borrow. Before proceeding with the private student loan application, students are given the opportunity to change their requested loan amount given the information they learned.
Because many students learn best by example, a real borrower’s experience about the problems that can result from overborrowing is weaved throughout the online course.
“A postsecondary education is attainable, but students must be equipped with the tools to understand its real cost,” said Jason Glass, director of the Iowa Department of Education. “This online resource complements the financial literacy efforts taking place in elementary and secondary schools across the state, while also filling a niche of educating college students in a way they can relate to and at the critical time when they’re applying for a loan.”
Since December, Iowa Student Loan has received positive feedback about “Student Loan Game Plan” from numerous loan applicants. Gary Steinke, president of the Iowa Association of Independent Colleges and Universities, also expressed his support of financial literacy tools like this that help students at Iowa’s private colleges and universities make wise borrowing decisions.
“Given today’s economy, student loan debt is a necessary reality for many college students,” Steinke said. “Iowa’s independent college and university administrators are supportive of efforts such as this that help students understand their options and how best to approach financial decisions necessary to pay the costs of their degree.”
About Iowa Student Loan
Since 1981, Iowa Student Loan, a private, nonprofit organization, has helped Iowa students and families obtain the resources necessary to succeed in postsecondary education. Iowa Student Loan currently helps more than 220,000 customers pay for college. The organization, based in West Des Moines, Iowa, also provides benefits in the form of discounted loan products and loan forgiveness programs and supports free college planning services for students and their families. For more information about Iowa Student Loan, visit www.studentloan.org.|