Debt Levels and Wellness SUNYFAP Spring 2009

1. Debt Levels and Wellness SUNYFAP Spring 2009

2. 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

3. 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.

4. 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

5. 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”

6. 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

7. 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

8. 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

9. 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

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

11. 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

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

13. 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

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

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

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

17. 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

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

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

20. 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

22. Right Info/Right Time Works

23. 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

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

25. 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

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 Identify At Risk Populations • Low-income Borrowers • Minority Borrowers • First Generation Borrowers • Withdrawn Borrowers • In-grace Borrowers • Delinquent Borrowers

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

28. 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/

29. 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

31. 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

32. 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

33. Experiment

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

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

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

37. 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.

38. If You Build It, They Will Come • Willingness and ability to adopt an innovation might depend on: • awareness • interest • evaluation • trial • success

39. If You Build It, They Will Come • Characteristics of each category of adopter include: innovators - adventurous, educated, evaluates varied perspectives, risk-takers early adopters – trend setters, popular, will seek out information if they need it early majority - thoughtful, gets information from many sources late majority – needs the information, borrows average and above average amounts laggards – needs the most attention, but last to get it

40. If You Build It, They Will Come • Some thoughts on marketing: • Word of mouth • Students • Staff • Faculty • Campus Resources • Televisions • Newspaper • Radio • Posters

41. 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.)

42. Collaboration Get Financially Fit! www.newyorkfed.org

43. 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

44. 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

45. 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.”

46. Build a Culture • Let the students participate • Assessment • Design • Development • Implementation • Evaluation

47. 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”

48. Doing Well by Doing Good • Financial Literacy Education works • National 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.

49. Doing Well by Doing Good • The Oklahoma Cooperative Extension Service • Statewide 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

50. 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.