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FACT or Fiction? New Online Tool Will Help Students Manage Loan Debt

Published:  July 12, 2012
Publication Image
Screenshot of FACT Budget & Loan Repayment Tutorial.

Yesterday, the Department of Education launched a new interactive online tool that provides students with financial management basics, including personalized information about a student’s current federal loan debt. Students access the resource, known as the Financial Awareness Counseling Tool (FACT), using their FAFSA PIN. This allows them to use their individual federal loan history to personalize five interactive tutorials about loans, budgeting, repayment, default, and financial planning.

Always curious (and admittedly critical) about the resources the Department of Education provides to students, I took FACT for a test drive using my own student loan information. While the tool is a good start, there is still a long way to go to ensure students will use it.

The Pros:

  • When students launch FACT, the first thing they see is their total federal student loan debt. The loans are disaggregated by type (i.e. subsidized, unsubsidized) with information about interest and principal. In addition, students can manually enter any private student loans. The data is presented in a graphically appealing way, giving students a relatively clear understanding of their federal loan debt.
  • FACT includes an interactive budgeting tool that helps students estimate what they will owe, spend, and earn. This is one of the most useful features of FACT:
  1. It takes a student’s current loan balance and shows them—both numerically and graphically—what their monthly and total payments would be under the standard, graduated, extended-fixed, and extended-graduated repayment plans. It shows how each different plan changes the total amount repaid when accounting for interest and principal.
  2. Students enter their income and monthly expenses to better understand the effect of student loans on their budgets. They can also change their student loan balance if they know they will be borrowing in the future

The Cons:

  • Students have to fill out an interactive quiz as they go along, and if they leave any field unanswered they cannot continue to the next page. This includes entering current educational expenses. If the purpose of this tool is to provide entrance counseling, that might be okay. But it’s frustrating and limiting for those, like me, who are already out of school. Many will exit the tutorial without seeing all that it has to offer.
  • Income-Based Repayment (IBR) and Income-Contingent Repayment (ICR) are not included in the personalized table of repayment options. While there is a link to both calculators, the calculators should be on the interface so students can better understand whether it’s a good option for them.

Ultimately, the opt-in nature of this tool will make it limited in its scope. But as I was filling out the quiz, I couldn’t help but remember the incredibly useless (and bland) exit and entrance counseling I was required to go through as a student for my federal student loans. If the Department of Education tweaks FACT, it could become a new and better version of exit and entrance counseling, reaching many students with highly personalized data. Otherwise it will probably languish in obscurity.

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