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Articles: Financial Aid

The number of students identifying as belonging to a community of color has doubled since Frankin & Marshall College has invested more in need-based aid and phased out merit scholarships.

Financial aid is in a state of flux, but an institution’s size and selectivity offer clues to what kind of student assistance gets prioritized.

Some public flagships and less-selective private schools are using increased merit aid to lure higher achievers from more prestigious private schools, while some highly selective colleges and universities are phasing out merit aid as they give more need-based assistance to bring lower-income students to campus.

Institutions that are successful in preventing loan defaults make it a campuswide effort, according to a recent survey by the Association of Community College Trustees (ACCT) and The Institute for College Access & Success (TICAS).

Nine community college administrators from institutions of varying sizes and locations were asked about traits of their borrowers and defaulters, as well as about default prevention efforts.

Joseph Trentacoste is assistant vice president of Student Services at Mercy College in New York.

With national student debt at a stunning $1.2 trillion and financial pressure playing a key factor in retention, colleges must take the initiative to help students maximize opportunities for financial aid. Yet many colleges have downsized their financial aid offices and automated various functions.

Streamlining the awarding and processing of student loans—Federal Perkins as well as institutional loans—began at the Illinois Institute of Technology with a simple question and a frustrating answer. “It started because I asked, ‘What is the process?’” recalls Jackie Anderson, associate director of student accounting. “No one really knew.”

Driving college loan defaults down

The coming change in how student loan default rates are calculated may mean bad news for some colleges and universities.

With the new calculations, the rate at which a group of students later defaults on loan payments will increase for most institutions, and schools with a particular default rate for three consecutive years will lose the ability to give Pell Grants. That’s why many are seeing this as the ideal time to look at how default prevention services are managed.

“We include in our emails a link to a brief video that explains that we are counselors, not collectors, working on behalf of the college the borrower attended, and that we work with borrowers and their loan servicers to resolve their loan payment issues. The video invites the borrower to call us.”

—Craig P. Anderson, senior vice president, business development, USA Funds

From managing loans to controlling spending, many college students find themselves dealing with a host of financial responsibilities for the very first time. And it’s not uncommon for them to trip up.

Campus financial literacy programs can help students steer clear of some of their most common financial mistakes. The challenge for educators is to find creative and clever ways to get their attention.

Many colleges are advising students how they can save money with digital and used textbooks.

As costly as tuition and textbooks can be, poor planning and time management can raise the prices even higher.

Richard O’Connor, director of financial aid at American International College in Massachusetts, says students at that institution have several options for saving on books. “About half of our students are low income, so just paying tuition can be challenging.”

Jacqueline Gregory is director of enrollment management marketing for RuffaloCODY.

These days, institutions can’t say they fully “control” their recruitment and enrollment process—but they can adjust to how prospective students and their families are navigating it.

At Texas Christian University, where there have been six suicides in the last three years, training staff to recognize the warning signs of suicide is considered an imperative. And because paying for an education is a major stressor for students, TCU has had every employee in its financial aid office trained in a detection method known as QPR.

Being a financial aid administrator is an accident waiting to happen these days. The soaring costs for college have produced a soaring amount of applications for assistance, creating a constant stream of traffic at the Financial Aid Office. There are times when it resembles an all-day rush hour, with students and parents in a hurry to get in and get out with some part of the gold they’re convinced is hidden there.

The interest in financial literacy has expanded beyond the financial office, which is where Lyssa Thaden, financial education content manager at American Student Assistance, used to focus her pitches.

“Now, at a stakeholder meeting, I’ll have someone from the financial aid office but also someone from admissions and enrollment management,” says Thaden, who consults with school sponsors of SALT, ASA’s financial literacy program. “The marketing folks show up, the residence life people show up, and even alumni.”

“If you build it, they probably won’t come.” That’s Sara Wilson’s take on the launch of the typical campus financial literacy program. As financial literacy project manager at USA Funds, she knows firsthand how many students participate and what they think later as they look back.

While numerous post-graduation surveys by the company show students regret not learning more about personal finance while they were in school, they also tend not to access financial literacy information when it’s offered on a completely voluntary basis, Wilson says.

New financial literacy programs aim to reduce student default rate. (Getty Graphics via Getty Images)

A spooky cloud of crimson smoke dramatizes the dread of overwhelming student debt in “The Red,” a short movie thriller created for SALT, the American Student Assistance financial literacy program for students and alumni.

Less dramatic but noteworthy still, college students logging onto the National Endowment for Financial Education’s CashCourse can take a “Financial Realities” quiz to test their knowledge. In the opening question, they’re asked what will have the worst impact on their finances: gourmet coffee drinks, borrowing money, or spending without a plan.

More higher ed leaders are concerned about maintaining enrollment levels at the same time Census numbers have revealed that colleges and universities lost half a million students in 2012. A drop-off had been anticipated for some time, but now institutions must scramble to manage.