What do 18-year-old college student need to know to qualify fortens of thousands of dollars in student loans, which may take themseveral decades to pay off? For example, do they need to know 1+1 =2?

Not really. They just need to be able to sign their names.Actually, most colleges do require student loan counseling – butonly when the student exits, after huge non-dischargeable debtshave been rung up.

These facts are shameful and no secret, but at times they becomemore visible. Recently, the Consumer Financial Protection Bureausued Corinthian Colleges Inc., a for-profit institution of lowerlearning. Among many colleges that have engaged in questionableloan tactics, Corinthian is the low-hanging fruit for the CFPB. TheCFPB complaint claims: “Corinthian referred internally to itsstudents as having ‘minimal to non-existent understanding of basicfinancial concepts,’ as well as poor or no credit history.” Thecompany’s marketing plan preyed on the financial ignorance ofgullible young people, according to the CFPB.

Corinthian highlights how vulnerable today’s young people are todebt temptation. Yet, if a student really wants to party for fouryears, is taking $40,000 in federal Direct Loans to attend State U.any smarter than Corinthian’s package?

Financial advisors can help to fill a knowledge gap by offeringa 30-minute counseling session to clients’ college-bound children,before they sign loan commitments. Here are key points tocover:

• You are personally responsible for repaying all amountsborrowed, with interest. This will be an important part of yourcredit record.

• My estimate of the amount you may need to borrow to finance fouryears of college is $X. The interest rate at which you areborrowing is Y%. Note: For federal Direct Loans to undergraduates,the interest rate on loans taken from July 1, 2014, to June 30,2015, is 4.66%. See: http://www.benefitspro.com/2014/06/02/how-to-explain-student-loan-interest-rates-to-clie

• You must begin paying back the loan, with interest, six monthsafter you leave college, whether or not you earn a degree. Theseloans generally may not be discharged if you declare bankruptcy. Ifyou don’t pay them back, the U.S. government may take actionagainst you, such as taking you to court and withholding taxrefunds, and your credit will be damaged.

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