JEFFERSON CITY, Mo. - Among Missouri college students with student loans, the average graduate heads out into the "real world" with $16,505 in student loan debt. Successfully managing that debt, particularly during tough economic times, can be a challenge; therefore, it's more important than ever that students be given the tools and guidance to manage debt wisely. That's the philosophy behind the Missouri Department of Higher Education's (MDHE) Default Prevention Grant program, which now helps 25 Missouri postsecondary institutions implement and strengthen efforts to prevent student loan default.

Schools participating in the grant program were recently awarded funds for defined default prevention activities targeted at increasing student success and decreasing the number of students that fail to pay on student loans. A total of $ $620,550 will be distributed to grant schools for the 2008-2009 academic year.

The Default Prevention Grant program covers a broad range of debt management programs, financial literacy workshops, and default prevention activities. "The great thing about this grant," says Marilyn Landrum, student assistance associate and grant coordinator, "is that it allows schools to select the programs or activities that are best suited to have a positive impact on their individual campuses and student population."

Grant funds have been used in a variety of creative ways to better serve students throughout the state. At some campuses, the extra resource allows for additional staff to provide one-on-one counseling for student loan borrowers and to keep in contact with former students through letters and phone calls. Others now offer a telephone hotline or live online chats to facilitate conversation with students. Some provide tutoring services to promote student success, offer financial literacy presentations, or host special "Default Prevention Day" activities and contests. Perhaps one of the most unique programs emphasizes strategies for living on a budget by capping a default prevention-themed event with a thrifty-minded fashion show by students modeling professional, interview-ready attire acquired for less than $25.

An effort has also been made at many schools to include further financial literacy content during student orientation and in beginning college courses. According to Landrum, the grant operates with the strong underlying belief that "helping borrowers build smart money management skills and healthy repayment habits is important not only to the success of our students on an individual basis, but also to the economy of our state." Borrowers that default on student loans face penalties that include a negative credit rating, wage garnishment, withholding of state or federal Treasury payments, and referral to a collection agency.

Grant program recipients include: Baptist Bible College; Crowder College; East Central College; Forest Institute of Professional Psychology; Franklin Technology Center; Harris-Stowe State University; Jefferson College; Lincoln University; Linn State Technical College; Metropolitan Community College; Mineral Area College; Missouri State University - West Plains; Missouri Southern State University; Missouri Western State University; Moberly Community College; New Dimensions School of Hair Design; North Central Missouri College; Ozarks Technical Community College; Park University, Ranken Technical College; State Fair Community College; St. Louis College of Health Careers; Southeast Missouri State University; Three Rivers Community College; and the University of Missouri.

To date, participation in the renewable grant program has been made accessible to Missouri colleges, universities, and career schools twice - at its inception in 2001 and again in 2006. The MDHE will notify institutions as future opportunities to submit grant request proposals become available.

To learn more about effective default prevention activities, postsecondary schools (including those not in the grant program) may contact the MDHE to request free, customized training.