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Financial Aid

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.

    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.

    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.

    The pressure institutions are facing from the growing student loan debt crisis is felt by all departments, from financial aid to admissions. Schools are struggling to justify tuition costs to prospective students, as well as to ensure recent alumni leave pleased with the institution, despite having student loan debt. In this web seminar, originally broadcast on November 13, 2012, representatives from American Student Assistance (ASA), St.

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

    Feedback from private student loan borrowers reveals they hold a host of common misconceptions about their loans. In comments and complaints submitted to the Consumer Financial Protection Bureau (CFPB), borrowers demonstrate a lack of knowledge about the difference between private and federal student loans, how bankruptcy can impact their loans, who holds and services their loans, what repayment options they have, and more. The consequences of these misunderstandings include unexpected default, forbearance fees, and ineligibility for repayment incentives.

    California State University, Fresno, takes pride in its reputation as one of the leading public universities in the state, but last year the business staff discovered that Fresno State was lagging in one noteworthy area: the percentage of students electing to receive financial aid refunds electronically.

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