Jul 12, 2012 08:36 AM EDT
New Financial Awareness Counseling Tool Launched To Help Students Manage Loan Debt
Amidst the ongoing student loan crisis, the U.S. Department of Education has introduced a new interactive tool to help students by giving awareness on financial management.
The education department has included a tool "FinancialAwareness Counseling" on the online website StudentLoans.gov. , which allows students to learn their individual loan history and manage their loans. The tool provides information about the student's current loan debt and gives personalized feedback to manage their finances.
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"Managing student loan debt can be a difficult and confusing process for many borrowers. That's why the Obama Administration has been working to unravel the mystery of college financing and arm students and parents with the information they need to make smart educational choices," said U.S. Secretary of Education Arne Duncan in a press release.
"Students need to know up front how much college will actually cost them instead of waiting to find out when the first student loan bill arrives. This new tool will help bring new transparency to the process of debt management on the front end and empower students to keep their school loan payments on track and on time after graduation," he added.
Students can avail "financial awareness counseling" tool which offers five interactive tutorials on topics ranging from understanding student loans to repaying debts and to avoiding default payments.
Americans are increasingly falling behind in paying their student loans. According to a report in Chicago tribune, the student loan debt has crossed the $1 trillion mark racing ahead of the amounts owed on credit cards and auto loans.
As a small respite to the students, the Congress recently voted to prevent the doubling of interest rates on Stafford student loans. President Obama signed a legislation to retain the interest rate of 3.4 percent for the next academic year which will save $1,000 for more than 7.4 million students and families.
In order to make college costs more transparent, the Obama administration is also planning to release its model financial aid shopping sheet in the coming weeks. Higher educational institutions will be asked to adopt the shopping sheet to give details to the students on financial aid they will receive in grants and scholarships.
The institutions need to give details on the difference between a federal loan and a private loan, how much loan amount the student needed to borrow and also information about an average student loan payment after graduation.