Debt Levels and Wellness GPCC Symposium 2008

1. Debt Levels and Wellness GPCC Symposium 2008

2. Who will be the next Bill Gates? • Bayer / Gallop “Facts of Science” Survey • 86% Believe someone in their generation will be the next Bill Gates • 60% Believe they personally know that person • 25% Believe they are that person!

3. A Growing Social Issue

4. 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

5. Quick Poll • Do you know students who have more than $100,000 in student loan debt?

6. Quick Poll • Do you see your students at the local coffee shop?

7. Quick Poll • Do you know students who have more than $15,000 in credit card debt?

8. Quick Poll • Have you had a student ask how to get an emergency loan?

9. Quick Poll • Do you know students who have declared bankruptcy?

10. 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.

11. Ten Key Ideas • Ten ideas every financial aid office should know when implementing/enhancing a program of financial literacy education on your campus. • bfinger@amsa.com

12. Commitments • Student • Learn • Pay • Society • Teach • Lend Student loans are the primary resource to pay for education. Debt management education is an essential part of society’s commitment. For more information visit www.amsa.com/policy/issues to read “Breaking the Deadlock: Unifying Our Federal Student Loan Programs”

13. 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

14. 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

15. 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.com Inflation adjusted per year averages

16. Grants vs. Loans Trends in Student Aid 2008, www.collegeboard.com

17. 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

18. NPSAS:04, www.nces.ed.gov

19. 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 and Jean M. Lynch Department of Sociology and Gerontology Miami University, Oxford, OH

20. 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.” 67%

21. What the students say… • “Students who borrow money for college should receive financial counseling.”

22. What the students say… • “Students who borrow money for college should receive financial counseling.” 97%

23. What the students say… • “College students should receive more information about loan repayments.”

24. What the students say… • “College students should receive more information about loan repayments.” 88%

25. What the students say… • College graduates who don’t pursue graduate school blame student loan debt as the primary reason.

26. What the students say… • College graduates who don’t pursue graduate school blame student loan debt as the primary reason. 40%

27. 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

28. High Debt/Large Impact • The 10-year default rate for students graduating in 1992-93 with more than $15,000 in debt. 20% Dealing with Debt, www.nces.ed.gov, June 2006

29. Our Commitment • Federal student loan program should focus on borrower as “consumer” • Consumer rights include debt management education • Debt management education = Entitlement

30. Right Info/Right Time • “With the right information at the right time, no student working in good faith should default.”

31. 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

33. Right Info/Right Time Works

34. 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

35. Right Info/Right Time at the School • Orientation • Peer debt counselors • Alumni testimonials • Cooking classes • “Prerequisites” • Web resources

36. 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

37. Group Think • What are the “right times” in a graduate/professional education where financial literacy education might be important?

38. Identify At Risk Populations • Low-income Borrowers • Minority Borrowers • First Generation Borrowers • Withdrawn Borrowers • In-grace Borrowers • Delinquent Borrowers

39. Identify At Risk Populations • High Undergraduate Debt • Large 1st Year Loans • Need-based Borrowers • Academic Progress

40. Pop Quiz! • What programs might you offer private loan borrowers?

41. 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/

42. 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

43. Best Practices • What resources have worked for you?

45. 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

46. 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

47. Experiment

48. Experiment Light vs. Real graphics; 10/06 email communication experiment

49. Experiment • “Trial and Error” • “Outside the box thinking” • “Test to see what works” • “Experiential learning” • “Play”

50. Experiment • Evaluation is important! • Worked Well • Do Differently