Approaches to increase support efforts towards students and schools

Financial Aid Viewpoints

Financial Aid Panelist:

Curt E. Martin, Director - Financial Aid Colorado Mesa University

Philip R. Schroeder, Director – Financial Aid Adams State College

Thad Spaulding, Director – Financial Aid Community College of Denver

ModeratorMisti Ruthven, Colorado Department of Higher Education

(or at least in Washington D.C.)

Is there truly intelligent life in the universe?

In the beginning…

HEREAREYOU

So…what does this have to do with financial aid??Another point of view…

The "Self-Operating Napkin" is activated when the soup spoon (A) is raised to mouth, pulling string (B) and thereby jerking ladle (C) which throws cracker (D) past parrot (E). Parrot jumps after cracker and perch (F) tilts, upsetting seeds (G) into pail (H). Extra weight in pail pulls cord (I), which opens and lights automatic cigar lighter (J), setting off skyrocket (K) which causes sickle (L) to cut string (M) and allow pendulum with attached napkin to swing back and forth, thereby wiping chin.

It’s as clear as the parrot on the perch!

Again..so what does this have to do with financial aid??

Rube Goldberg's cartoons became well known for depicting complex devices that performed simple tasks in indirect, convoluted ways. (sound familiar?)

It’s easier to discuss the origins of the

universe and our place in it.. or decipher a

Rube Goldberg invention than it is to

explain financial aid to a student and their

family!!(or anyone for that

matter!)

As we see it… there is change on the

horizon

In July 2009, FFELP was eliminated by Congress. Establishing the Federal Direct Loan Program for all Title IV institutions.

What types of loans are students borrowing?

Direct Subsidized and unsubsidized loans. The private loan market is still a last resort for most low income students.

Mostly Stafford (Unsubsidized) Large increase over the past 3-4 years

Any and all, but there are significant signs of slowing, see chart

Federal Loan Program(Community College of Denver)

Optional Loans(Community College of Denver)

It really didn’t!Students could still borrow funds to pay for

college. Subsidized, unsubsidized and Plus.The student loan limits, both annual and life-

time aggregate limits didn’t change.Interest rates only changed from prior

legislation. Students became more aware of who they

borrowed money from and what company serviced the loan(s).

Yes, they lost some minor benefits. (most didn’t know they existing anyway).

How did this affect students?

Most institutions made a smooth transition from FFELP to DIRECT Lending. (not all)

It eliminated the complexity of multiple lenders , guarantors, processes and systems.

One lender, one system. (sort of..)However, in some cases it shifted

administrative burdens from other areas of institutions to the F/A office.

How did if affect institutions?

Increases! Especially over the last 3 years -19,000 - 25,000 in 4 years aggregate.The costs for school are going up, but perhaps

not as dramatically as borrowed aid would warrant. We have a uniform increase for loans across the board.

Student loan debt for those who graduated in 2010 from Colorado institutions was $22,017. The national average debt was $25,250.

What changes do we see in the average borrower indebtedness?

Changes in loan programs had little or no affect on student indebtedness or a students ability to borrow.

The Bennett hypothesis (the amount of federal financial aid support increases – the cost of higher education increases) Other sources are evaporating, therefore the federal pool of funding has become even more important.

Economics and societal shifts largest drivers of costs.

Right or wrong…or somewhere in between?

We do what we can. Our forms have repayment rates on them, we talk about loans quite a bit in Financial Literacy and Default Prevention, students must see counselors to request increases to loans.

Total financial management.Very little or minimal as required by regulation.

The administrative burden imposed on financial aid administrators has kept many from focusing on students and helping them understand what has happened and what will be happening to them.

How are you advising students on borrowing?

UP - along with the national average.Increase follows economic trends.Spiked in the 2007 cohort year, declining

slowly (16% to 15.2%).

How have your institutions rates moved over the past few years?

Hard to explain to upper administration. Shifted frame of reference…freaks everybody

out.Added anxieties. Similar to rearranging the

deck chairs on the Titanic.

How have the shift to 3-yr rates affected you?

Hired a Default Prevention and Financial Literacy guru, we have a default management plan and task force. Learning a lot about the students who fall into default.

Most institutions have implemented Default Prevention Management Programs, however, limited resources and available staffing levels have made it difficult to administer effectively.

Hired a debt management/ financial counselor.

What are you doing to manage them?

Better communication with students in regard to servicers (loans for borrowers still split) - Financial management tools.

Cohort Default Rates.Take over the default prevention management

programs from institutions.

What additional private sector support could you use?

At least we still have them…for now.Processing is quicker.The stuff they aren’t cutting is going well.

Federal Aid Programs (Loans and Grants) What’s going well?

The stuff Congress is cutting, lots of rules in the past 3 years.

 Regulations changing VERY fast, worse than 80’s, increased reporting and oversight.

Pell grant eligibility limits, SAP changes, Verification, program cuts-losses, multitude of regulatory changes and lack of clarification.

What’s Not going well?

Colorado ranks number 1 in the race to the bottom. A recent article by Thomas G. Mortenson, Senior Scholar at The Pell institute for the Study of Opportunity in Higher Education, projected Colorado to lead the pack in the race to the bottom. Of all states, Colorado could cease funding Higher Education by 2022 or sooner.

Thad- truly a sad state of affairs.

Challenges with State Aid Programs

• Education not viewed as very important, low taxes, nothing else to subsidize state income.

• Schools are left to fund themselves, do we really have a public Higher Ed system?

• Government foresight is limited to special interests, and education is not one of them, or at least perceived as one of them.

Explain unique situation in Colorado Programs

Questions