Financial Literacy “What” Students Need to Know

1. Session 27 Financial Literacy“What” Students Need to Know Elizabeth Coogan and Ed Pacchetti | Nov. 2012 U.S. Department of Education 2012 Fall Conference

2. What We Are Covering • “What” Students • Segments of student borrowers at risk • Common characteristics • “What” are the Financial Literacy Basics • Budgeting • Borrowing • Repayment Strategies • “What” are Schools Doing to Promote Financial Literacy?

3. What Students to Target • Students at risk of non-completion • Students at risk of default • Students at risk of taking on unsustainable amounts of debt

4. Characteristics of Non-Completers • Students taking remedial courses • Students working more than 20 hours per week • Students with limited financial resources • Students attending school part-time • Students attending for-profit schools

5. Characteristics of Defaulters • Students who do not complete a program • Students who attend for-profit schools • Students who rely on private loans • Students who borrow much more than the average • Students from low-income backgrounds

6. Unsustainable Debt • 7% of undergraduate borrowers have loan balances over $50,000 • 46%of graduate borrowers have loan balances over $50,000

7. Risks Related to These Segments • Borrowers who dropout of school are 4 times more likely to default on their student loans • 16.8%of borrowers who dropout of school default on their loans, compared to only 3.7%of borrowers who graduate

8. High Amounts of Debt (>$50,000) by Age Source: NSLDS borrowers as of June 30, 2012 with open loans and a balance greater than zero; age is calculated as of June 30, 2012; Parent Plus loans excluded.

9. Overlap • Students from low-income groups are less likely to complete than their higher- income counterparts, which puts them at higher risk of default • Low-income students are more likely to attend for-profit schools

10. What is Financial Literacy? GENERAL DEFINITION The ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing. 2008 Annual Report, President’s Advisory Council on Financial Literacy FOR OUR PURPOSES The ability for postsecondary students to use knowledge and skills to make good decisions related to budgeting, borrowing,and repayment strategies.

11. The Basics • Budgeting • Borrowing • Repayment Strategies

12. Budgeting

13. Borrowing • Federal Loans vs. Private Loans • Maximizing other sources • Minimize borrowing

14. Repayment Strategies • Basic fundamentals of a loan • Repayment benefits of a federal loan • Who to contact and keeping in touch

15. Federal Student Aid Resources • Financial Awareness Counseling Tool (FACT) www.studentloans.gov Session #9: Loan Counseling Tools Session #13: Default Aversion Activities • Federal Student Aid www.studentaid.gov Session #25: Hands-On StudentAid.gov

16. Things To Consider Things to consider when implementing your own program • What type of program delivery makes sense • Institutional resources • Possible external partners • Methods of outreach

17. Resources White House Toolkit – Page 28: Higher Education A Guide to Increasing Financial Capability among Students in Higher Education www.whitehouse.gov/webform/financial-capability-toolkit-tell-us-what-you-think Student Financial Literacy, Campus-Based Program Development Sonya L. Britt & Dorothy B. Durband, 2012.

18. Did you know… A full 80 percent obtained at least some of their student loan information from their college’s counselors or website. 6,500 undergraduate and graduate respondents Citation: NERA Economic Consulting on behalf of Young Invincibles(2012)

19. Telling Their Story University of Florida Michael S. Gutter, PhD Associate Professor and Family Economics Specialist Amanda Blanco Project Coordinator Georgetown University Marina Test Executive Assistant to the Dean Central New Mexico Community College Ann Lyn Hall Executive Director, CNM Connect

21. Objectives • General Overview of Financial Literacy at UF • Student Outreach (methods of getting students to participate, are particular students sought after/mandated to attend) • How does your program address: • Budgeting • Advising Students the Cost of Attendance and Amount of Borrowing • Repayment Obligations and Strategies

22. Overview of Financial Literacy at the University of Florida • Major Efforts Led by • Family, Youth and Community Sciences (FYCS) • Gator Credit and Spending Help (C.A.S.H.) • Savings in the Swamp • Students in Free Enterprise (SIFE) • Partnership with FYCS faculty and Staff • Office of Student Financial Affairs

23. Student Outreach • Florida Master Money Mentor (FMMM) • Recruiting Volunteers • PFFP Students • Service learning • Internships • Practicums • Financial aid counselors • Training • Referrals

24. How do we reach students? • Mobile Campus • Social media • Facebook • YouTube • Twitter @gatorCASH #Gatorcash #PFFPUF • Financial Education Seminars • Invited and promoted • Networking • student financial aid, student organizations, fraternities, sororities, Florida Opportunity Scholars • One-on-One Peer mentoring

25. Common Budgeting Approach • We focus on semester based-budgeting • Done in groups or one-on-one • Process includes • Identifying issues and goals • Tracking or reviewing expenses • Establishing a monthly budget • Spreading loan distributions out to avoid shortfall • Possibly learn to borrow less

27. And… • This becomes a tool they can use and adapt as they take on new obligations • After graduation when loans are due • Living within their means as they begin their careers • Works with different apps as well if one has a Smartphone

38. CNM Connect

39. CNM General Information • Central New Mexico Community College is the largest postsecondary institution in the state. • Serving over 29,000 credit students • 65% minority • 60% first generation college goers • Average age 29 years, with children • Annual income is $20,000 or less for 66% of our students

40. CNM Connect • CNM Connect has over 6,411 active participants • Mostly female 59% and minority 73% • 71% with children • 53% first generation students • 67% have trouble paying monthly bills

41. What the Data Told Us • Based on data from SENSE and Non Retained Students Survey Team (NRRST) • Community Connections: A strong connection to someone at the college who can help when difficulties arise • Instruction: Academic resources and modes of instruction that promote greater levels of student engagement • Financial Aid: Financial support including advisement, resources, and aid • Awareness and access to resources: Promoting access to an awareness of resources so students can use them when needed

43. WHAT IS CNM CONNECT? • Focus on student navigation and success through students’ entire experience of CNM – from pre-enrollment through completion of students’ stated goals • This is the right door • Students don’t experience silos, multiple referrals • Holistic, comprehensive understanding of students’ needs and the college and community's resources • Concept/place/people • In person, online, and telephone support

45. Timeline

46. Students Served

47. Contact Information Ann Lyn Hall 505-224-4311 www.cnm.edu/connect ahall@cnm.edu

48. A Call to Action We must work together Your students are our customers We share the same goal STUDENT SUCCESS!

49. Contact Information We appreciate your feedback and comments! Elizabeth Coogan Senior Advisor, Customer Experience Office elizabeth.coogan@ed.gov Ed PacchettiDirector, Customer Analytics ed.pacchetti@ed.gov