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Student Debt

Borrowing trends for postsecondary education among students and parents has become a focal point across a broad range of discussion among college administrators, policymakers, legislators and between students and families.  Comprehensive modification of student loan programs is a prominat component of PROSPER, the current re-authorization bill for the HEA.   A new report “Key Issues on Student Debt.”  offers a compilation of articles that explore the trends and issues in student borrowing, as well as the policy debate in Congress and on campuses.

The compilation can be accessed at: https://www.insidehighered.com/node/246581/download/49f16d11c09eb91e70429cc2d00cfad9

Registration for a free webcast, to be held on Tuesday, July 10th at 2:00 PM (eastern time) is available at:

https://event.on24.com/eventRegistration/EventLobbyServlet?target=reg20.jsp&partnerref=ESE&eventid=1770706&sessionid=1&key=279BEFC9FF31291D47C52B1AE930D71A&regTag=&sourcepage=register

Cost of Attendance/Award Letters

COA/Award Letters

New America and uAspire issued a report that finds that some colleges routinely use award letters that fail to provide students and families with the information they need and do not adhere to the ED/CFPB and NASFAA recommended ‘shopping sheet’ guidelines. The report examined award letters from 515 institutions. Among the findings reported:

  • Of the 455 colleges that offered an unsubsidized student loan, 136 terms were used for the loan, including 24 that did not include the word “loan”
  • Of the 515 letters, more than one-third did not reference actual costs of attendance
  • 70% of letters “grouped all aid together and provided no definitions to indicate to students how grants and scholarships, loans, and work-study all differ”
  • Nearly 15 % of letters considered PLUS loans as an “award,” without indicating that they are loans
  • Of those institutions with work-study funds, 70% did not explain work-study requirements
  • About 40% of colleges calculated what students would need to pay using 23 different methodologies
  • Only about half of letters included “next steps” for students.

The report notes that there are many challenges to providing enough money for students to go to college.   “It is exceedingly difficult for students and families to make a financially informed college decision,” the report says. “While solutions for tackling the cost barrier may be complex, solutions to improve award letter terminology and formatting are well within reach.”

 

Recommendations offered to present aid offers with greater transparency include;

  • Require a written financial aid offer to all qualified students
  • Employ standardized terms and student-friendly definitions
  • Include cost of attendance with breakdown of direct costs and indirect expenses
  • List gift aid and loans separately
  • Do not include Parent PLUS loans and work-study as line items in aid offers
  • Calculate the student’s net cost and estimated bill
  • Identify critical next steps

 

The full report can be accessed at:

https://www.newamerica.org/

How Houston Community College Sets Students Up for Success

By Amy Glynn, VP of Financial Aid and Community Initiatives at CampusLogic

Driving the ABCs of student finance—improving accessibility, reducing student borrowing, and improving completion—at a community college requires innovation, challenging the status quo, and keeping the ever-changing needs of the nation’s 12 million students front-and-center. JoEllen Soucier, Executive Director of Financial Aid at Houston Community College, joins me to talk about her diverse student body and how her team is keeping students in school, on track, and in good financial health.

JoEllen, thanks for joining us during Community College Awareness Month. You’ve been in financial aid for more than 30 years, and we’re thrilled to be able to share your insights with the community.

JoEllen: Thanks, Amy. Great to join you. I have spent my entire career administering financial aid and I couldn’t imagine doing anything else with my life. Financial aid is a critical resource that provides access to higher education and, in turn, the American Dream. We change lives every day and I am so proud to be doing that.

Houston Community College has a very diverse student population. Can you describe it?

JoEllen: We are probably one of the most, if not the most, diverse community college in the country. We serve a variety of needs for students from a range of socioeconomic groups, cultures, and areas of the world. We also have one of the largest international student populations.

What type of demographic changes or trends have you seen over the past five or 10 years?

JoEllen: First of all, all community colleges are seeing somewhat of a decline in enrollment. The number of high school graduates is going down, so the pool of potential students is getting smaller. We also happen to be in a city with a low unemployment rate, meaning there’s opportunity for people to get jobs without pursuing higher education. That option is starting to decline, but it’s still there. Growth in this area has also slowed down a bit—we had a lot of people migrating here after Hurricane Katrina, but that has slowed.

Fewer of our students use financial aid than in the past, as well. We’re one of the lowest-cost community colleges in the country. Because our cost is low, people don’t see the need to apply for financial aid and pay out of pocket, instead. I come from New England, where 70% of students are on aid. Here, it’s 42%. We are giving out less aid than we were a few years ago, and that decline in borrowing is at a greater rate than our small decline in enrollment. People are finding ways to pay for college without taking out student loans, so they’re reducing how much they’ve borrowed.

Some of the decline in borrowing also has to do with the fact that we have a whole team of financial aid coaches who promote other ways to pay for college, without just quickly turning to student loans.

That’s definitely impressive—considering many Financial Aid Offices are struggling to get students to truly understand the real debt they are signing up for. How does your team do it?

JoEllen: I can’t speak more highly about them. They are six people who do a tremendous amount of work—for such a small team. Trained financial coaches, they help students reduce debt and increase assets and savings. They help students understand the dangers of “payday loans” and credit card debt. From workshops to seminars, they find ways to get out in front of our students and really connect.

Financial literacy is a huge focus for all institutions, not just community colleges. Are there ways you’re able to really leverage community resources?

JoEllen: Yes, our team works hard to help students tap into community resources. For example, they brought a tax-preparation service to campus. They’ve worked with food banks to bring food trucks to campus to help students who struggle with food insecurity. They help student apply for SNAP benefits. They’ve been invited to speak at conferences throughout the country, too, and have won national awards.

That’s amazing. What other impacts has this team made—along with decreasing the number of students requiring aid?

JoEllen: When I got here, our default rate after three years was 22%. To me, that’s unacceptable. Through our coaches’ efforts, and a default management company we hired, we’ve brought that down to 11.9 percent.

Another thing: After Hurricane Harvey, our coaches identified 500 students that were in high need. It was a tremendous effort. They met students one-on-one to see what they needed. In the end, only 16 of the 500 students that received emergency money to ended up withdrawing. That’s all due to their efforts.

I don’t think I’ve ever spoken to a community college that is able to pivot so quickly to an unique situation like that.

JoEllen: I have an amazing team! They are all good, smart people who roll up their sleeves and work as hard, and as long, as needed. They work for the students. They truly care about people.

Obviously, you have a process that works. But why do you think loan default is such a big issue for community colleges?

JoEllen: It has to do with the students we serve. We service everybody and anyone. All ages, all walks of life. We have open enrollment. We don’t have—and don’t want—the luxury of picking and choosing who we enroll. We are here to help anyone who wants to get an education.

Some students aren’t ready, aren’t as prepared as they need to be. We work hard to get them ready for college; to help them be successful, long-term. Other students are in terrible financial disarray and we work very hard to get them out of that—but not everyone can find a way out. We also work with folks who have real-life challenges—and we give them a chance. But not everyone is able to take that chance. This is why community colleges have a lower graduation rate—and lower retention rate.

Recently, there has been a lot of discussion about the need for more vocational training for students. Do you see that changing community colleges’ place in higher education?

JoEllen: Because we are open enrollment, some assume community college is poorer quality and less prestigious. That’s an old thought process. As we educate people about cost, debt-consciousness, and value-add, that perception is changing. With the type of faculty we have—and their knowledge and involvement in the education field—students are getting a high-quality education for a good price. Word about that is spreading, and it’s starting to change things.

What’s the biggest obstacle community college students will face over next five years?

JoEllen: I think it’s that a lot of students have no idea what they really want to do. They come to higher education knowing that they want an education and they test the waters. The problem with that is that financial aid programs are now limited, in the amount of Pell, unsubsidized loans, and subsidized loans. We need to work with students to help them find out a little quicker what they are good at, what their niche is, and what they like—so they aren’t wasting so much time and money figuring it out.

What do you love most about your job?

JoEllen: The amazing people walking through our doors every day. Whenever I can, I take the opportunity to go to our campuses and talk and work with students.

I just want to remind people to stop and smell the roses, to stop and appreciate the kinds of people we are attracting to community colleges. They are extremely diverse. We need people from all walks of life. Whether they started in a big huge mansion that their parents own, or a little apartment with a single mom making ends meet, each student is a sponge that is ready to learn.

Thanks for sharing your thoughts, JoEllen. I hope I cross paths with your amazing team at a future conference!

Read more from Amy >

Student Debt: Disproportionate Share held By Women

Student Debt: Disproportionate Share Held By Women

In a recently released report from the American Association of University Women (AAUW) women share a disproportionate share of outstanding student debt.  The report analyzed data from 2008, 2012 and 2016 and found that, on average, women took out more in student loans for each of those years to obtain both bachelor’s degrees and post-graduate degrees.

Of the estimated $1.4 trillion in outstanding student debt, women owe $900B (64%) and men owe $477B (35%). Meanwhile, women earn 57% of bachelor’s degrees but women with college degrees make 26% less than male peers.

“Women face a catch-22: go to college and take on student loan debt but get a higher paying job or, alternatively, forgo college and avoid the debt, but be locked out of higher-wage careers” said Kevin Miller, senior researcher for AAUW.

For black women, the disparity is worse. They take on more student debt and were more likely to struggle financially after completing college than any other demographic.

*Full report can be accessed at: (not all data in the report has been updated)

https://www.aauw.org/aauw_check/pdf_download/show_pdf.php?file=deeper-in-debt

Changing Climate for Private Student Loans

Changing Climate for Private Student Loans

There appears to be a convergence of events that suggest the private student loan industry may be reinvigorated.

Currently ED’s OSFA website presents private student loans as an option students should only consider after loans offered by the government. But the site could soon take a less-biased approach towards private loans.  According to an analyst’s report from the Education Finance & Loan Symposium, held last week, ED’s head of FSA strategy and information, Wayne Johnson, reportedly stated in a speech that ED ‘might move to assist private student lenders in building awareness amongst student populations that are unserved by federal loans’ and ED’s website may soon offer more favorable treatment of non-government education lending.  Johnson told the audience that ED’s website “was mainly supportive of federal loan programs, but that would likely change in the near future,”

This new position, combined with House Education & Workforce legislation (PROSPER) of capping borrowing limits on federal loans and possibly removing some of the federal subsidies could create increased demand for private lending options.  There is also a growing investor appetite for securitizations of student loans.

This new environment creates challenges for FAAs who generally advise borrowers to maximize their borrowing through federal programs before seeking private lending.  It will be worthwhile to follow these events as HEA reauthorization moves through Congress.

For more information please visit the following sites:

https://www.marketwatch.com/story/a-government-student-loan-website-may-soon-give-priority-to-private-companies-2018-05-31

https://www.govtrack.us/congress/bills/115/hr4508