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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.

Exploring the shore: Roger Williams University has found a new source of revenue in tapping its scenic waterfront campus to  expand its once tiny summer programs. (Photo: Peter Silvia)<p>

Five years after the Great Recession’s official end, higher ed endowments and fundraising are finally recovering, but there is no rising financial tide that’s lifting all boats—especially smaller ones that depend heavily on tuition.

Along with enrollment, public funding and debt, providing health care to employees will be among the top financial pressures on higher education in the coming years, say several campus administrators.

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.”

Who's buying what?

When it became clear that the scientific equipment in hundreds of labs across the University of Pittsburgh campus was not being maintained effectively, professionals in the university procurement department began looking for a new provider to do the job.

The university had long relied on a purchasing cooperative to secure favorable contracts with vendors for bulk products such as office supplies. When administrators discovered that the cooperative had established an agreement with Specialty Underwriters (SU), a provider of equipment maintenance, their search was over.

Reverse auctions have, by some accounts, proven to save institutions more than 40 percent on goods and services.

Seconds tick by. Vendors submit bid after bid in real time, battling it out to win the business of the campus procurement office. The opposite of eBay, this reverse auction format results in the price going down with each bid.

Institutions are increasing efforts to equip those in a broad array of campus leadership positions with the skills they need to identify and woo potential donors.

The University of Florida’s last fundraising campaign, completed in October 2012, surpassed its $1.5 billion goal and finished nine months ahead of schedule at $1.72 billion. Despite this tremendous success, the next campaign will deploy a new tactic—a fine-tuned army of the university’s leaders prepared and practiced in the strategies of fundraising.

Construction budgeting software allows Southern Methodist U to maintain a digital record of projects and ensure future projects have adequate funding for site development and other line items.

A Midwestern state university budgeted about $12 million for a major addition to its library several years ago. At the time, there was not a tightly controlled project planning process at the institution and the library’s plaza—already a major central gathering space on campus—was not included in the project budget.

Sidewalks weren't part of the construction project budget for the Hurvis Center at Lawrence U, but that piece was still planned ahead, through a local landscaper.

In some cases, colleges and universities will opt to fund some site development items, such as landscaping, as an operational cost instead of a capital cost.

But the decision depends on owner needs and should still be made in advance, during the budgeting process for the entire project. Here’s how two institutions have approached the decision: