The cost of attending college has surpassed federal financial aid limits and fewer parents are paying the balance. As private lenders have been targeting undergraduate students to obtain private (alternative) loans to fill the financial gap, many students do not have parents or other adults to help them navigate one of the largest financial investments they will ever make.

Financial aid counselors, more than anyone else on campus, are in a position to discuss quality consumer loan information with students and families. Federal financial aid requirements for counseling undergraduate students on federal student loans do not pertain to private student loans. This qualitative study examined the role of college financial aid counselors regarding private loan counseling for undergraduate students.

Participants in the study were 20 financial aid counselors at 4-year public and 4-year private, not-for-profit, colleges and universities located in 12 Middle West region states. The participant counselors were interviewed about their past and present private loan counseling practices, the reasons more undergraduate students obtain private loans, the differences between private loans and federal student loans, their perceptions of counseling effectiveness and counseling limitations, and their recommendations for counseling students about private loans.

There were five major findings: (a) participant counselors believed that the 2007 Slate Act significantly limited their ability to counsel students on private loans; (b) many undergraduate students do not read or do not comprehend the written and online information counselors provide on private loans; (c) more parents are not willing or are unable to pay college costs; (d) counselors believed that one-on-one private loan counseling for students would be more effective than their current 'surface' counseling practices; and (e) many students and parents do not fully grasp the differences between private and federal student loan options.