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Articles: Financial Aid

For a school to operate at peak efficiency—and best serve students—it is necessary for various administrative departments to understand the purpose and daily operations of other offices. In particular, the activities and regulations that impact the financial aid office can have widespread effects on the rest of the campus. With that in mind, here are 10 tips to help all departments work cohesively with the financial aid office:

There’s been much buzz about what the new student loan legislation means for students. It lowered interest rates and made borrowing more affordable in the short term, but how will it affect colleges and universities?

Signed into law by President Obama on Aug. 9 after a summer of negotiations, the bill allows undergraduates to borrow at a 3.9 percent rate for subsidized and unsubsidized federal loans.

Student loan debt is topping $1 trillion, and borrowers aren’t the only ones with reason to be concerned. While higher education leaders aren’t responsible for the loans, they also have a stake in getting rising debt and default levels under control.

Megan McClean, director of policy and federal relations for the National Association of Student Financial Aid Administrators, says the first reason for concern about debt is simply that administrators care about students and want them to succeed.

When the Debt Reduction Task Force at The University of Texas System was gathering data for a report released last December, one of the most surprising findings for chairman Scott Kelley was the strong correlation between students who default and those who don’t complete their degrees.

Casual observers of the 2013 National Association of Student Aid Administrators conference in Las Vegas this summer may have felt as if they were seeing double, with all the talk of “prior-prior year” income tax.

Stable funding of federal Pell Grants, one of the nation’s main financial aid programs for low-income students, would increase affordability and accessibility, according to many groups with a stake in higher education. But despite its decades-long history of assisting financially needy students, the program also faces perennial threats to its funding.

As student loan debt levels and default rates in the United States continue to climb, consumers remain concerned about the accessibility and affordability of higher education. The average overall loan debt for bachelor’s degree recipients is fairly manageable (about $26,500 for the class of 2011, according to The Institute for College Access and Success). Still, students and families are shouldering a greater portion of the cost of college through loans than they ever have before.

Most financial aid offices are already beginning to receive appeals from families looking to improve their aid awards. A recent Wall Street Journal article encouraged families who were unhappy with their aid offer to call the aid office “as soon as possible.” Financial aid appeals have been a regular part of the aid awarding landscape for some time now, but the way institutions respond to appeals varies widely. How your own institution responds can affect enrollment, net tuition revenue, and your school’s reputation in the marketplace.

Higher ed organizations are bracing for potential cuts in student loan funding and the trickle down of major cuts to agencies that support the bulk of institutional research and development.

  • Loan limits would mirror those in the Direct Loan Program. New borrowers could borrow IDEA loans up to the combined amount they could have borrowed from the subsidized and unsubsidized Stafford programs for their academic level (except that total would all be unsubsidized.) Graduate and professional students who could have borrowed an additional amount above their unsubsidized Stafford eligibility under the Grad PLUS program would be able to borrow that same amount in additional IDEA funds.

A House bill, the Earnings Contingent Education Loans (ExCEL) Act of 2012, attempts to reduce complexity, improve default rates, and increase the effectiveness of federal student loan subsidies—and would dramatically alter the way federal student loans are paid back. On Dec. 17, Rep. Tom Petri (R-Wis.) introduced the bill, which would provide unsubsidized loans and require income-contingent repayment for all borrowers through a payroll withholdings system.

At Tuesday’s State of the Union (SOTU) address, President Barack Obama discussed the importance of education at all levels and after putting emphasis on early education and job training for high schoolers, he asked colleges and universities to work to make higher education more affordable for students. 

With families’ growing concerns about financing higher education, and the federal government’s increasing involvement in recommending and/or requiring certain communications regarding institutional costs, every institution should be taking a step back to review all of the tools currently being used to present affordability, explain the aid application process, and communicate the awards themselves.

To avoid student loan pitfalls and misconceptions, NASFAA recommends administrators ensure students know: