Do schools employ tools to limit student borrowing?
Unlike banks and other large corporate lenders, most schools go over and beyond the minimum requirements of the law to educate students on how to borrow responsibly and place limits on the amount of money students can borrow. In many instances, schools won’t graduate a student unless he or she completes financial aid counseling. In contrast, Sallie Mae and other private lenders only require students to complete online exit interviews. • Is it appropriate for schools to become lenders given they determine the amount a student can borrow and in some cases are also setting the price of tuition? School lenders have some of the lowest default rates when compared to other FFELP lenders including, Sallie Mae, corporate banks, and direct loan program. In fact some school default rates are the lowest in the student loan market, which indicates schools are not encouraging students to bite off more loan then they can afford. Moreover, the grant assistance earned from school lending helps to lower
