Did you know that more people than ever are going to college?
On the surface, this is a wonderful achievement. After all, more college enrollment means a more educated population, and the benefits of that are limitless.
But, like many social trends, this one has an alarming and dangerous downside.
Naturally, with the increase in enrollment comes an increase in the number of students applying for and receiving financial aid. Financial aid includes scholarships, grants and loans, the latter of which must be paid back with interest.
Compounding this are significant state and federal government regulations that are putting even more pressure on young college students and recent graduates.
According to the Pew Research Center, more college students are completing four-year degrees than ever before. Among students ages 25-29, 33 percent will complete four-year degrees, up from 17 percent in 1971.
The cost of a four-year degree varies greatly by institution but the common thread remains: many students choose to complete their education and take on momentous amounts of debt without any serious thought as to how to pay it back. As a result, student debt in the United States now tops 1 trillion dollars.
It is a sad legacy for generations of Americans to come and one that is beginning to cause graduates to question the real value of higher education.
Some believe that the so-called student loan bubble, much like the real estate bubble in 2008, is about to burst.
These disturbing debt statistics from Pew’s population surveys underscore that potential scenario:
- Student debt has climbed 511 percent since 1999.
- Two out of every three students are graduating with debt.
- 48 percent of graduates say student loans have made it harder to pay their other bills.
- As much as 57 percent of Americans now believe that college is “not a good value.”
- In the past 30 years, tuition to private four-year universities has risen approximately $30,000 per year.
- Nearly one in five U.S. households (19 percent) owed money on student loans in 2010, more than double the proportion in 1989.
Wilmington University has made a widespread effort to communicate these national developments to its students and has been implementing student-centered strategies to promote financial responsibility for several years. Since the 2008 financial collapse that propelled the nation’s debt crisis to record numbers, Wilmington University has been tracking this disturbing national trend and making significant headway in helping its students avoid debt and manage their finances.
Aligning Tuition, Budgets and Cost of Living
Prior to the 2008-2009 school year, Wilmington University saw an increase in financial aid recipients from 33 percent to 51 percent of total student enrollment. As part of its ongoing effort to be flexible and attentive to students’ needs, the University aligned its financial aid budgets with the cost of tuition and local and regional cost of living expenses. Since the University has 14 locations, this calculation can vary greatly based on the location and level of study of each student.
Around that time, the University implemented an institutional priority to only raise tuition 2.5 percent each year. This was, and still is, the lowest tuition increase in the region.
The University also partnered with Higher One, a financial aid disbursement service with more than 1,300 public and private higher education clients. This partnership served to improve its financial aid refund procedures as well as to empower students to act on their own financial behalf. Prior to this, students had voiced concerns about the difficulties they faced in securing their financial aid refunds and the lack of individual control over their financial aid accounts.
The University’s partnership with Higher One continues to provide many benefits for students, including better information security, fiscal management tutorials, multiple refund options and electronic bill payment.
Giving students the ability to manage their accounts electronically rather than wait for bills to come in the mail also allows students to easily return loan refunds. This way, students do not incur unnecessary debt and can make progress in paying back their loans sooner.
Since the inception of the Higher One partnership, Wilmington University has seen 76 percent of refunds disbursed to aid recipients get deposited into a Higher One account.
Staying Ahead of the Government Curve
In 2009-2010, the University began offering Direct Loans (DLs) along with FFELP loans one year prior to the effective date of the federal government mandate for all institutions of higher education to offer only DLs. This dual offering was most beneficial to new student borrowers who were able to continue with the DL program rather than switching loans mid-program. The University then offered assistance with the DL application process to all students and educated them about the impact of this change on their existing and future loans.
Financial literacy is essential to the health and success of any educational institution. Wilmington University is no different. In 2009, the University began offering financial literacy sessions to the community throughout the state of Delaware and at its locations in New Jersey. These sessions provide help to the public in both financial aid for higher education and personal finance. They continue today and are open to the public.
The First Year Experience (FYE) course that is required of all freshmen began incorporating visits from financial aid advisors. These advisors informed students about “smart borrowing” and other essential aspects of financial literacy, including:
- The ins and outs of SAP. Students are placed on warning if they don’t meet the minimum GPA requirement, the minimum pace of completion, and/or if they are taking too long to complete their degree.
- The University formed a committee of representatives from Advising, the Registrar’s Office and the Student Success Center to help students who are placed on probation (with an “academic plan”). Students are guided through the process and are made aware of what is required on their part to improve their GPA, pace or timeframe. For example, a student can re-take a class to improve their GPA. The federal government will pay for a student to re-take a previously passed class one time.
- Students on an academic plan have a designated SAP Liaison who works directly with the committee to speak on the students’ behalf. The committee takes into account the student’s enrollment and grade history to assist with developing the individualized academic plan. For example, if an average student tends to register for courses on a part-time basis, that student may need a few semesters to be able to increase or improve their SAP status. If students do not take reasonable steps to improve their status, the Financial Aid Office will discontinue their financial aid eligibility.
- The Financial Aid Office (FAO) revamped its financial aid award acceptance process in 2011-2012. Once notified of their total borrowing eligibility, students are required to inform the FAO in writing of exactly how much of the loan funds they would like to accept. (This was a change from past procedure, where students only had to inform the institution if they wanted to decline or decrease their loan.) This was done in an effort to make students be more proactive and aware in regards with taking on debt.
Making it Easy – and Accessible
Wilmington University improved and modernized its communications by allowing students to view, accept and/or decline their financial aid package online through the University’s student portal.
In 2011, the University’s Financial Aid Department teamed up with Career Services to strengthen its work study program by offering a more streamlined orientation process that lays out clear expectations for students’ behavior, personal finances and responsibilities in the workplace.
And, to help both students and employees, Wilmington University in 2012 joined forces with Stand By Me, the state of Delaware’s financial empowerment program, as a solution provider for those in financial jeopardy due to the challenging economy. Stand by Me brought a financial coach to the University’s New Castle campus who is available to meet with students and staff confidentially to discuss their financial responsibilities.
Previous financial literacy classes offered by the University have been replaced with individualized Stand by Me appointments. All conversations or communications between the financial coach and the client are kept strictly confidential.
The Stand by Me coach makes appearances at each First Year Experience section to explain the benefits of the program as well as the ins and outs of financial literacy. The Financial Aid Office continues to participate in the FYE courses to inform students about the availability of funding, SAP and wise borrowing.
The University’s Stand By Me coach is Allison Laurant, who has more than 15 years in the financial industry, including banking, real estate, and mortgage financing. Her services include financial coaching, access to financial services, college access support, and referrals to community and public programs. Access to the program is free.
Laurant says that upon her initial meetings with students, she concludes that most have a basic understanding of money and their personal finances. “Out of a 10, people know about a 5,” she says.
But to get that additional knowledge that is crucial to understanding student debt and financial independence, a student should take advantage of the many services offered by Stand By Me throughout their college career, and beyond.
“Many of the regular clients I have are non-traditional students who are undergoing a big life change such as purchasing a house, divorcing, or preparing for their children’s college fund,” she says.
Laurant says it’s important for students to understand what their financial outlook will be once they graduate, and to start saving immediately.
“Taking simple steps to save may not cover the full freight of expenses, but it can at least make other expenses a little more affordable,” she says.
Nicole McDaniel-Smith, the University’s Director of Financial Aid, holds advising sessions in which she directs students to credible sources for aid options such as www.studentaid.ed.gov and www.finaid.org. Her office helps students calculate their expected (estimated) income after they graduate, based on their program of study and career plans, and compares that estimate to the amount the student will owe in repayment of their financial aid.
Wilmington University’s commitment to supporting, understanding and responding to the needs of each student remains strong. That includes, but is not limited to, helping students familiarize themselves with the challenging and oftentimes overwhelming task of paying for school. This underscores the institution’s deeply ingrained mission of service – providing individualized attention, career services, support after graduation and much more.
“The University wants its students to succeed, regardless of the external challenges and obstacles they may face in their pursuit of a degree,” McDaniel-Smith said.