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Debt Levels and WellnessSUNYFAP Spring 2009
Goals/Objectives
• Discuss the importance of financial literacy programs for students at graduate and professional schools
• Share with you all the tools you need to implement a successful program on your campus
• Provide resources/ideas for improving/expanding existing programs
What are financial literacy programs?
Programs that educate to improve financial literacy provide individuals with the knowledge, aptitude and skill base necessary to become questioning and informed consumers of financial services and manage their finances effectively.
“Building the case for financial education”, Journal of Consumer Affairs, Summer 2005.
Ten Key Ideas
Ten ideas every financial aid office should know when implementing/enhancing a program of financial literacy education on your campus.
Commitments
Society
- Teach
- Lend
Student
- Learn
- Pay
Debt management education is an essential part of society’s commitment.
Student loans are the primary resource to pay for education.
For more information visit www.amsa.com/policy/issues to read“Breaking the Deadlock: Unifying Our Federal Student Loan Programs”
A look at the numbers
1997-98 compared to 2007-08:
Undergraduate students borrowed $4280.00 in 1997-98
In 2007-08 average amount borrowed increased to 5231.00
Trends in Student Aid 2008, www.collegeboard.com
A look at the numbers
1997-98 compared to 2007-08:
# of graduate/professional school borrowers increased 78%
Total amount borrowed increased 133%
Trends in Student Aid 2008, www.collegeboard.com
A look at the numbers
In 2007-08:
1.2 million graduate students borrowed Stafford Loans averaging $17,076.
181,000 graduate students borrowed Grad PLUS Loans averaging $16,269.
Trends in Student Aid 2008, www.collegeboard.com
Grants vs. Loans
From 2002-03 to 2007-08:
Grant aid grew 2.6% per year
Federal loans grew 7.3% per year
Trends in Student Aid 2008, www.collegeboard.comInflation adjusted per year averages
Nonfederal Loans as % of Total
Between 1997-98 and 2005-06,
4% 10%
Impact of Grad PLUS, 2007-08
4% 7%
Trends in Student Aid 2008, www.collegeboard.com
Graduate Education Debt All Education Debt(Grad & Undergrad)
Graduate & Professional Degree Programs
Percent Borrowing
Cumulative Debt
Percent Borrowing
Cumulative Debt
Total 60.1% $37,067 70.1% $42,406
Master's Degree 58.4% $26,895 69.3% $32,858
Doctoral Degree 51.0% $49,007 58.3% $53,405
Professional Degree 86.5% $82,688 88.4% $93,134
MBA 53.0% $35,525 63.6% $41,687
MSW 76.5% $27,136 81.0% $37,029
PhD 40.0% $36,917 46.8% $41,540
EdD 53.4% $49,050 65.7% $47,725
Law (LLB or JD) 87.7% $70,933 89.7% $80,754
Medicine 95.0% $113,661 95.0% $125,819
NPSAS:04, www.nces.ed.gov
What the students say…
“When I borrowed money to complete my undergraduate degree, I had only a vague idea about the amount of debt I was incurring.”
Report on Student Debt and Alumni Giving, Drs. Margaret Platt Jendrek andJean M. LynchDepartment of Sociology and GerontologyMiami University, Oxford, OH
What the students say…
“Students who borrow money for college should receive financial counseling.”
What the students say…
“College students should receive more information about loan repayments.”
What the students say…
College graduates who don’t pursue graduate school blame student loan debt as the primary reason.
High Debt/Large Impact
The 10-year default rate for students graduating in 1992-93 with more than $15,000 in debt.
Dealing with Debt, www.nces.ed.gov, June 2006
Our Commitment
Federal student loan program should focus on borrower as “consumer”
Consumer rights include debt management education
Debt management education = Entitlement
Right Info/Right Time
“With the right information at the right time, no student working in good faith should default.”
Right Info/Right Time
In-Grace Borrowers- Repayment reminders
- Deferment/Forbearance Options
- Repayment Options
- Job Related Information
Interview Techniques
Cost of Living by City/Region
Salary Data
Negotiating Compensation
Product Target ChannelPrint Email Phone Web
Journeys Student loan grace period
☑ ☑ ☑ ☑
Transitions Withdrawn students ☑ ☑ ☑ ☑Consolidation Recently consolidated ☑ ☑ ☑DAAR Email Program
Delinquent borrowers ☑
After Cure Accounts current after delinquency
☑ ☑ ☑
Bright Beginnings
Defaulted borrowers ☑ ☑ ☑
Post Rehab After complete loan rehab
☑ ☑ ☑ ☑
Right Info/Right Time Works
Right Info/Right Time at the School
Orientation
- Creating a Financial Roadmap
- Money Management for Graduate Students
Budgeting
Credit Management
Wise Borrowing
- Understanding Federal/Private Loans
- GradPLUS Loans
- Understanding Consolidation Loans
Right Info/Right Time at the School
Orientation- Peer debt counselors
- Alumni testimonials
- Cooking classes
- “Prerequisites”
- Web resources
Right Info/Right Time at the School
Graduation- 5 Weeks, 5 Months, 5 Years
- The Joys of Repayment
- Deferments/Forbearances
- Understanding Consolidation Loans
- Loan Forgiveness Programs
- Tax Benefits for Students
Identify At Risk Populations
Low-income Borrowers
Minority Borrowers
First Generation Borrowers
Withdrawn Borrowers
In-grace Borrowers
Delinquent Borrowers
Identify At Risk Populations
High Undergraduate Debt
Large 1st Year Loans
Need-based Borrowers
Academic Progress
Lots of Resources
Go to the source- www.myfico.com
- www.ftc.gov
- www.bba.org.uk
Use credible references- www.annualcreditreport.com
- www.treas.gov/offices/domestic-finance/financial-institution/fin-education/
Lots of Resources
Don’t reinvent the wheel
“Financial Literacy for Graduate Students”
Presenters:Kristi L. JovellDirector of Financial Aid, Suffolk University Law School (MA)Charles PruettDirector of Financial Aid, Georgetown University Law Center (DC)
http://www.nasfaa.org/redesign/WebinarCenter/Webinar_11_06_08.asp
Alumni Giving
Important Findings- Respondents with higher loan amounts were less likely to
contribute to their alma mater than those with lower loan amounts.
- Satisfaction with the helpfulness of the financial aid office in terms of debt management information tends to increase alumni giving.
Read the report: www.amsa.com/fap/resources
Alumni Giving
Important Findings- Satisfaction with the helpfulness of the financial aid office in
terms of explanation of loan repayment plans tends to increase alumni giving.
- Satisfaction with the helpfulness of the financial aid office in terms of an explanation of loans tends to increase alumni giving.
Read the report: www.amsa.com/fap/resources
Experiment
Experiment
0
2
4
6
8
10
12
14
16
Open Rate Click Through
ASA Light
ASA Real
ASA Light
ASA Real
Light vs. Real graphics; 10/06 email communication experiment
Experiment
“Trial and Error”
“Outside the box thinking”
“Test to see what works”
“Experiential learning”
“Play”
Experiment
• Evaluation is important!
- Worked Well
- Do Differently
If You Build It, They Will Come
innovators (2.5%)
early adopters (13.5%)
early majority (34%)
late majority (34%)
laggards (16%)
Diffusion of Innovations, Everett Rogers, 1962.
If You Build It, They Will Come
Willingness and ability to adopt an innovation might depend on:
• awareness
• interest
• evaluation
• trial
• success
If You Build It, They Will Come
Characteristics of each category of adopter include:innovators - adventurous, educated, evaluates varied perspectives, risk-takersearly adopters – trend setters, popular, will seek out information if they need itearly majority - thoughtful, gets information from many sourceslate majority – needs the information, borrows average and above average amounts laggards – needs the most attention, but last to get it
If You Build It, They Will Come
Some thoughts on marketing:
- Word of mouth
Students
Staff
Faculty
- Campus Resources
Televisions
Newspaper
Radio
Posters
If You Build It, They Will Come
- Testimonials
Alumni
Area professionals
In the news
- Co-brand with other like events
Financial Planning Week (Oct.)
Financial Literacy Month (Apr.)
Financial Aid Awareness Month (Feb.)
Collaboration
Get Financially Fit! www.newyorkfed.org
Collaboration: On Campus
•Financial Aid•Office of the President•Academic Deans•Office of Student Affairs•Admissions staff•Student Health Services•Career Center•Student business services
•Residence Life•Fraternities/Sororities•Student Organizations•Business schools•Athletic Organizations•Parent Associations•Alumni Associations•Other campuses
Get Financially Fit! www.newyorkfed.org
Collaboration: Off Campus
•Non-profits•Credit Counseling Services•Centers for Economic and Financial Education•Local Foundations•United Way organizations•Guarantors•Local/State/National government agencies•US Treasury
•Federal Reserve Bank•Local Banks/credit unions•Financial services institutions•FTC•Department of Education•OCC•Local businesses•Financial Advisors•Insurance companies/agencies
Get Financially Fit! www.newyorkfed.org
Build a Culture
Use every opportunity to speak about financial literacy
- Students
- Financial Aid
- Other Departments on Campus
- Faculty
Visit www.amsa.com/fap/resources to read the report: “Partnership
Dialogue Series: A Focus on Communication.”
Build a Culture
Let the students participate
- Assessment
- Design
- Development
- Implementation
- Evaluation
Build a Culture
Peer to Peer Programs
- Ohio University College of Osteopathic Medicine
- Vanderbilt University Divinity School
Visit www.amsa.com/symposium/2008 to hear the presentation, “Working With Your High-Risk Borrowers”
Doing Well by Doing Good
Financial Literacy Education worksNational Foundation for Credit Counseling Study
“Over 50% of counseled borrowers had improved credit scores and majority reduced accounts, debt and
delinquencies.”
“Building the case for financial education”, Journal of Consumer Affairs, Summer 2005.
Doing Well by Doing Good
The Oklahoma Cooperative Extension ServiceStatewide Money 2000™ program
“The data lend support for the efficacy of financial literacy training in promoting improved financial behaviors.”
“Financial Management Education: Its Role in Changing Behavior,” Journal of Extension, June 2007
Doing Well by Doing Good
Cost of Attrition
It costs more to attract new students than it does to retain existing students.
“Financial Literacy and Retention.” Ruth Adams, American Association of Collegiate Registrars and Admissions Officers, Fall 2006.
Doing Well by Doing Good
“Knowledgeable consumers who make informed choices are essential to an effective and efficient marketplace.”
“Household financial management: the connection between knowledge and behavior,” Marianne Hilgert and Jeanne Hogarth, Federal Reserve Bulletin, July 2003.
