Student loan debt letter templates provide your students with an overview of what they have borrowed and what they will need to pay once they are no longer enrolled in classes.

The point of the debt letter is to help students make better choices about student borrowing, including the degree they choose and the credit hours they take based on the money they intend to borrow.

Related whitepaper: Diplomas, Debt & Default

Although not all states require institutions of higher education to send letters to their students, doing so may be in your best interest. Data shows1 2that students who receive debt letters along with counseling:

  • Graduate early
  • Graduate with less debt
  • Are more likely to choose a STEM major
  • Have higher grades
  • Seek support from financial aid staff

Of course, for these letters to be valuable to students and their families, they must be understood. Unfortunately, a study by UW-Madison3 found that many student loan letters are less than helpful.

Problems with Current Student Loan Letters

Because all states do not require student loan letters, and each state creates its own requirements, letters from institutions differ in both what they say and how they say it.

The study found that:

  • The average first and second-year college student cannot understand the language found in student debt letters
  • The language differs between public and private institutions
  • The letters focus mainly on loans without mentioning or providing resources for alternative funding sources
  • Many letters do not contain contact information
  • Despite a digital format for most letters, these letters do not leverage any multimedia technology

Considerations for Implementing a Debt Letter

Based on these findings, the study suggests considerations for institutions as they work to create or modify their student debt letters.

For instance:

  • Consider what your institution hopes to accomplish by providing these letters to students
  • How will you determine if you accomplish these goals?
  • How will you determine if students understand the student loan letters?
  • How often will you send the letter? In what medium? Is there a better day of the week or time of day to ensure that students will see the communication?
  • If using a digital medium, is the letter formatted for computers, tablets, and smartphones?
  • Consider your student population, including language preference, reading ability, and accessibility.
  • Does the letter comply with state requirements?

What Should Be Included in a Debt Letter?

The US Financial Literacy and Education Commission4 determined that college debt letters need to provide the following:

  • Amounts borrowed for both federal and private student loans
  • Repayment amounts based on different repayment programs
  • Tuition plan options
  • How interest will accrue when deferring payments
  • The average amount borrowed by peers
  • The entry-level salary for a student’s major
  • Additional resources for financial aid
  • Additional financial literacy strategies

How iGrad Can Help

Providing your students with the iGrad Financial Wellness program helps in several ways.

First, iGrad has a Smart Borrowing course to help students borrow and prepare for higher education. While taking this course, students will start with the basics, learning about the different types of federal loans and tools available.

Then, they will learn strategies and methods for smart borrowing and proper money management. Finally, the course discusses repayment options, including such topics as deferments and income-based repayment programs.

In addition to this course, iGrad offers several tools to help students. These include:

  • Scholarship search
  • Student loan snapshot
  • Resume critique
  • Job search
  • Budget

Finally, iGrad offers a debt letter template to help students make better financial choices.

The iGrad student loan debt letter template meets the requirements for all state-mandated letters, can be used digitally or in hardcopy format, and links to multimedia educational resources such as articles, videos, and financial literacy courses.



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