SAN DIEGO—Leading financial education company iGrad has launched a new debt letter initiative to provide colleges and universities a best-practices template to send personalized, detailed student loan information to students.
Thirteen states currently require debt letters to be sent to all student loan borrowers: California, Florida, Illinois, Indiana, Maryland, Nebraska, Oregon, Pennsylvania, Texas, Utah, Virginia, Washington, and Wisconsin.
The iGrad student loan debt letters tell student borrowers their loan balance, expected future repayment amounts, repayment options, implications of deferral and forbearance, and more.
iGrad is a leading provider of interactive and adaptive online financial wellness platforms for universities, companies and financial institutions. Its iGrad™ financial wellness education platform for college students is used at more than 600 colleges and universities nationwide.
“I’ve had staff tell me they are using iGrad to plan for retirement, to see if they are ready to purchase a home, or when deciding whether to lease or buy a car. There is truly something for everyone in this tool.” Leah Young - Director of Financial Aid at Dickinson College
Dickinson College, a private liberal arts college in Carlisle, Penn., is the first school to use the debt letter.
Dickinson College Director of Financial Aid Leah Young said the goal in partnering with iGrad was to create opportunity for its diverse population of students, staff and alumni to easily access iGrad’s adaptive financial wellness content.
“Not everyone has the same starting point when planning for their financial future,” Young said. “We want to provide students with financial wellness education that meets them where they are, whether they want to better understand what their loan repayments will be after graduation, estimate their paycheck, set up a budget, take a course on understanding credit reports or do an in-depth scholarship search.”
Providing useful content for faculty, staff and alumni is important too, Young said.
“We encourage all Dickinson community members to take advantage of the many resources iGrad offers,” she said. “I’ve had staff tell me they are using iGrad to plan for retirement, to see if they are ready to purchase a home, or when deciding whether to lease or buy a car. There is truly something for everyone in this tool.”
Research shows that student financial literacy programs can lower student loan defaults, decrease financial stress that leads to better academic performance and educate students on how to manage their finances for a lifetime.
Although many see this crisis as one that affects only the borrower, student loan debt affects the entire economy. High student loan debt burdens prevent people from buying homes, starting businesses and saving for retirement, among many other things.
Student loans are now the second-largest category of household debt in America, topping $1.5 trillion, according to the Federal Reserve. The Department of Education estimates that just over 10 percent of student loan borrowers are in default, and researchers at the Center for American Progress estimate that as many as 30 percent of student loan borrowers can't keep up with debt just six years after graduation.
“Dickinson College was instrumental in shaping our debt letter feature,” said iGrad founder and President Rob Labreche. “College students are under more financial stress than ever before, with lack of financial knowledge being a key reason. Dickinson College understands that, and we are thrilled to be a major part of its commitment to financial literacy.”
The U.S. Financial Literacy and Education Commission issued a report last year stating that colleges and universities should help students understand important financial concepts and make sound student loan decisions.
According to the commission’s report¹, colleges should provide lessons in mandatory financial literacy courses and financial-aid letters that itemize attendance costs.
The commission found that students are not financially literate. In fact, barely over a quarter of the students could answer three simple financial questions correctly. When asked about their student loans, these students also had little understanding about the loan, its repayment terms, and how the interest rate will affect their payoff amount.
This new iGrad student loan debt letter template, which meets the current requirements for the 13 states mandating debt letters, can be sent out via mail or email. In addition to providing a current balance and projected monthly payments, it also provides links to educational resources such as how to access their full student loan information on the National Student Loan Data System, articles, videos and financial literacy courses. iGrad recommends that schools send out the debt letters after every loan disbursement, which is typically twice a year.
Designed around a proprietary behavioral algorithm, iGrad personalizes financial information for each student’s situation and needs. It also offers tools, quizzes, videos, articles and a library of multimedia content. Included in the iGrad platform is a student loan tracking tool which aggregates student loan balances and estimates monthly payments, helping to prepare students for these payments after graduation. It adapts to each user’s specific circumstances, even providing interactive educational content on retirement and mortgages to those who need it.
iGrad is a San Diego-based financial technology company that offers artificial intelligence-powered financial wellness solutions to more than 600 colleges and universities, more than 20,000 employers and more than 300 financial institutions. iGrad’s Your Money Personality™ was recently recognized by the Institute for Financial Literacy with the 2020 Excellence in Financial Literacy Education (EIFLE) Adults’ Education Program of the Year award. iGrad also received the 2019 Eddy Award for Financial Wellness by Pensions & Investments for its Enrich platform. For more information about the iGrad platform, visit http://www.igradfinancialwellness.com. For more information about the Enrich platform for employers and financial institutions, visit http://www.enrich.org.
1 - https://home.treasury.gov/system/files/136/Best-Practices-for-Financial-Literacy-and-Education-at-Institutions-of-Higher-Education2019.pdf