Business Best Practices for Your Financial Aid Office by AccessLex Institute

Business Best Practices for Your Financial Aid Office

Proven techniques that increase efficiency and effectiveness AN ACTION REPORT FOLLOWING THE

Survey of Financial Education Practices at Graduate and Professional Institutions and Programs BROUGHT TO YOU BY

FEAC

A ccess L ex I nstitute Financial E ducation A dvisory C ommit tee

www.AccessLex.org

AN ACTION REPORT FOLLOWING THE

Survey of Financial Education Practices at Graduate and Professional Institutions and Programs SEE ALSO:

Student Engagement Social Media

FEAC

Financial Education Advisory Committee

AccessLex InstituteSM recognizes the need to provide graduate and professional students high-quality and timely information to help them fully understand the impact of the debt they incur, while in school and throughout their lives. In an effort to fill that need, AccessLex formed its Financial Education Advisory Committee in 2014. This Committee is critical in helping to address the unique and specific needs of this student population and will —through review, analysis and research — assist AccessLex in meeting those financial education and literacy needs. In its inaugural year, the Committee worked to better understand the financial education practices of schools serving graduate and professional students. Through the deployment of a qualitative survey to student financial aid offices, the Committee learned that schools are overwhelmingly providing financial education to the graduate and professional students they serve, but opportunities exist to expand access to meaningful, effective financial education. The Committee is currently working to respond to survey findings and expand access to graduate and professional focused financial education. The Committee, comprised of the skilled leaders listed below, welcomes your input and suggestions.

2015 COMMITTEE MEMBERS: Bryant Anderson | Senior Director of Student Services, Illinois College of Optometry Susan Bogart (Vice Chair) | Director, Financial Aid, The Pennsylvania State University, The Dickinson School of Law Robert Coughlin | Director of Financial Aid, Harvard Medical School John Garcia (Chair) | Financial Aid Director, Michigan State University College of Law Mathiew Le | Assistant Dean of Admissions and Financial Aid, University of Washington School of Law Tracy Simmons | Assistant Dean, Admissions, Diversity Initiatives & Financial Aid, University of the Pacific, McGeorge School of Law Jill Stone | Director of Financial Aid, Yale Law School Wendy Vonnegut | Director of Legal Studies, Methodist University

CONTENTS

5 Introduction 5

Establishing a Program on Campus

Engaging Students

Entrance Counseling

Exit Counseling

9 Credit 11 Budgeting 11

Additional Topics to Increase Impact

Tell me and I forget. Teach me and I remember. Involve me, and I learn. BENJAMIN FRANKLIN

Introduction At the core of any financial aid office mission is one essential service: providing students with the information and tools they need to make informed decisions about their financial options. Students need information on budgeting, creditworthiness, loan repayment options, and their future financial goals. But, like so many departments at institutions of higher learning, financial aid offices have limited resources and staff. They must do more with less to accomplish their mission. Given these competing challenges, this report contains some helpful best practices in establishing a financial education program for your school. You’ll read about examples gathered by the Financial Education Advisory Committee (FEAC) for your benefit and replication as appropriate. This report, in tandem with FEAC’s companion reports on social media and student engagement, will equip you with both tried-andtrue and hot-off-the-presses ideas to build and grow your program.

Establishing a Program on Campus Coordinating Efforts In developing financial education programs, financial aid officers should coordinate efforts with their: 1. Main Campus Financial Aid Office. With limited departmental resources, collaborating with your main campus financial aid office is essential to providing comprehensive financial education to your students. Programs, presentations and toolkits may already be in place and your University’s financial aid office would be a great starting point for developing any financial education programs or series. 2. Admissions Office. Collaborating with the admissions office to promote financial education programming at your University sends a strong message to students and prospective students of the University’s commitment to educating students

on the financial implication of achieving higher education. One example of collaboration with the admissions office is providing them with materials or handouts that list the various financial education programs your institution offers, so that all newly applied and accepted students receive such information with all other standard intake materials. 3. Career Services Office. Because a student’s job and income are linked to their ability to afford their loan payments and/or qualify for loan repayment programs, it is essential that Career Services offices participate in the dissemination of this important information. For example, financial education information could be provided to students applying for positions in various sectors of legal employment. Or, the office may provide a brochure with detailed information on Public Service Loan Forgiveness or loan repayment assistance programs to students who will be working in public service positions. 4. Student Services/Registrar’s Office. Sometimes getting students to take action on a specific requirement (e.g., exit counseling) is a challenge for an institution. A financial aid office may coordinate efforts with their student services or registrar’s office to place holds on a student’s account or transcripts to strongly encourage a student to complete the action or important counseling session.

Accrediting Agency Support Financial aid offices should check with their accrediting agency or any industry-specific member organizations to determine if there are any established best practices or policies to assist the school. For example, NASFAA, a member organization of colleges and universities, endorses a set of principles to help guide institutions in the development of their financial aid policies.

Engaging Students Holding students’ attention is always difficult, but it is particularly challenging when the subject, while for their own good, is complex, dry, difficult to process, and sometimes hard to hear. But there are many ways to creatively connect with students. Any financial education program can use a combination of the contact points we describe below. And, we recommend our companion report dedicated to student engagement for even more ideas. 1. Access to Calculators, Websites, Videos and Customized Information. Information provided on a school’s website will no doubt be the basis to any co-curricular (and possible curricular) activities. Though it may be the most inexpensive way to provide information, the limitations may be in evaluating the usage and comprehension of these free resources if not paired with any tool for evaluation. (In other words, how will you measure the success and impact of free, optional materials?) Another limitation may be the challenge of keeping the materials on a website 6

updated, considering the limited resources of the financial aid office and oftentimes limited support from IT. 2. Seminars and Workshops. Many financial aid offices coordinate efforts on campus for these types of live or live-online financial education activities. For students, workshops and seminars require little time commitment. However, for the organizers, a larger amount of time is needed to prepare, publish and market these events. They do, however, offer an opportunity to “prove” reach and effectiveness by measuring attendance, conducting in-session pop quizzes or checks for understanding, and collecting session evaluations. 3. Classroom Instruction. This format is probably the most familiar to students’ learning styles. However, many teachers may not feel qualified to teach personal finance topics. The Illinois Online Network at the University of Illinois provides an online, eight-week, instructor-led Teacher Certification course for personal finance topics. iGrad has designed a one-credit college course curriculum with a flipped classroom format, ready for any school to use at a minimal cost. These innovative approaches to teacher and student preparation for this topic can be a terrific part of a new program or the expansion of an existing program.

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4. Peer-Learning and Mentoring. A number of institutions use this method to provide financial education and/or counseling. The greatest benefit to this type of contact is that untrained students will have contact with other trained/ coached students with similar experiences, deepening the “realism” or practicality of the techniques those students proport. This approach maximizes your education force by accepting the premise that not all financial educators must be on-staff — that any student who has learned to navigate financial waters and has been successful at implementing sound strategies has a story to tell and share. Putting real-life ambassadors to work for your mission is not limited to trainings and counseling sessions; these students can be mobilized to market your trainings to the student body, to post to social media channels, to document (photograph, film, or write about) examples of saving or spending on campus, and to guest-write for blogs or students newspaper columns. 5. One-on-One Counseling. This method of contact will require the greatest institutional resources — finances, staffing and facilities, to name a few. While time- and resource-intensive, this is still a strong and important piece of an effective financial education program. To help with the demand of repayment counseling, outside resources can be used, including AccessLex Institute.

Entrance Counseling Entrance counseling is a vital piece of financial education for any financial aid office. In fact, it is often the first piece of financial education many students receive. Helping students understand the basics of borrowing is critical in developing a dialogue with them throughout their post-undergraduate years. Students attending law or medical school often accrue substantial debt. The American Bar Association (ABA) and the Association of American Medical Colleges (AAMC) require law and medical schools respectively to offer entrance counseling for new students who are borrowing federal loans. Failure to ask new borrowers to comply with entrance counseling requirements could put the schools’ accreditation in jeopardy. Providing effective entrance counseling

programming is a proactive approach to the topic of indebtedness. First-time borrowers are required to complete federal entrance counseling through www.studentloans.gov, www.mappingyourfuture.org or a similar website. In many cases, a graduate/professional institution or program will require entrance counseling even if it was completed during a student’s undergraduate education. Some schools have additional entrance counseling requirements such as in-person or group sessions, or additional online materials and instruction. For example, at the University of the Pacific, McGeorge School of Law, Assistant Dean Tracy Simmons and her Director of Financial Aid, Joe Pinkas, use interactive sessions during orientation with their students, combining presentations and games to engage their students more effectively. The broad approach aligns nicely with the Department of Education’s recommendation to use written tests or interactive programs to ensure that the students understand the terms and conditions of their loans. When should this counseling be provided? Many schools provide information well before students are on campus, usually through online sources like www.studentloans.gov. Additional counseling is often provided during orientation, although schools sometimes hold orientation activities close to the start of the school year, which provides little time for reflection. Ensuring your students have a moment to pause and reflect on the information provided will result in more considerate actions when accepting student loans. Involving alumni in entrance counseling, or holding entrance counseling annually, are some of the other options schools have for supplementing their initial interactions with students. Similarly, if faculty members have a background in financial topics, and show interest in helping students understand financing and loan repayment, then inviting them to provide a presentation — or work with the financial aid office to give one — might be a good way to delegate some of the training responsibility. This could also be a good way to let students hear the same information the financial aid office provides, but from a different perspective and another authority. The same could be said for having current students speak to incoming students; it supports the goals of the financial aid office, yet comes from a different voice with which students may find more common ground.

Exit Counseling Of equal importance for schools is providing exit counseling to graduating students. Not only is exit counseling a crucial step for connecting with students one more time, but it also gives those students an opportunity to ask the questions they may have been ignoring or were afraid to ask during their school years. Finally, exit counseling is a requirement and must be provided online, in-person or in another format for any student who received a federal loan while attending graduate/professional school. 8

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Exit counseling approaches often mirror many of those used for entrance counseling: online options such as www.studentloans.gov, one-on-one opportunities with the financial aid office staff, and group sessions led by financial aid staff. At the Illinois College of Optometry, the exit counseling is structured differently: it is offered for several months, in various pieces during the student’s last semester of attendance. Students are sent several emails regarding consolidation, repayment and even a reminder to pay their first loan bill. Bryant Anderson, senior director of student services, says the format works well. Questions about “what do I do next?” are generally avoided. According to Anderson, “We structure it this way to address broad questions and to give graduating students an overview first.”

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We structure [our exit counseling] this way to address broad questions, giving an overview first. BRYANT ANDERSON SENIOR DIRECTOR OF STUDENT SERVICES ILLINOIS COLLEGE OF OPTOMETRY

Credit As we know, credit is much more than the piece of plastic in a student’s wallet. Credit is important to establish a financial record that will allow banks, landlords, electric and phone companies, and even insurance companies to extend money or services to your students when they graduate. Creating a positive credit history during the college years can help young graduates save money on interest rates when they eventually want to finance a car, home, or other large purchase. A graduate’s potential employer may use credit to figure out their level of responsibility, maturity and future planning. Making the most of credit begins with understanding credit, and the sooner someone can get control of their spending and keep control of their credit, the sooner they set out on a path for long-term financial success. Despite its importance, not all schools find a way to work credit into their financial literacy priorities. Often, we are focused on loan repayment and borrowing for education, and not so much on the other spending habits and needs of our population. But it is not a far leap, and not outside of your area of expertise, to create a program that addresses this important topic. A comprehensive program that rolls together these many topics, and shows their equal importance and interdependence, could be rolled out at the same time. An email to accepted applicants in April, which is National Financial Literacy Month, and a time when many of those accepted students are still carefully reviewing every communication from their school in excitement for their arrival on campus, could be a great approach. See the following page for what an email campaign could look like.

TO: newstudents@university.edu FROM: financialaid@university.edu SUBJ:

National Financial Literacy Month

Did you know that 2016 college graduates will leave school with (on average) a little over $35,000 in debt? It is National Financial Literacy Month, so while you prepare for your bright academic future here at [school name], my role is to help you understand your financial future. That future starts now. I’ll be your guide on the financial journey that is college. To get you started, I’ll be sending you a series of short, monthly emails from now until August with links and quick activities that will help you plan ahead financially. Don’t worry; each email will only take you a few minutes. Up first: Credit. Let’s get started!

Introducing Credit Much more than the plastic card in your wallet.

A credit report is a collection of information about you and your credit history, kept by the three major credit bureaus:

Equifax (US & Canada)

TransUnion (US & Canada)

Experian (US only)

These credit bureaus track and store information on your credit history such as: How promptly you pay bills

The total amount you owe

How many credit cards you have

Credit bureaus also report a credit score, on a scale from 300 to 850. Lenders use your credit score to decide whether to lend you money, and what interest rate to charge you. Insurance companies, landlords and future employers may also check your credit score. To maintain a good credit score, you should: •

Check your credit score periodically to ensure there aren’t mistakes or evidence of identity theft (loans you didn’t take out, etc.).

•

Contact the credit bureau to correct inaccurate information, if any.

•

Pay all of your bills on time.

•

Limit the number of credit cards you sign up for, and don’t let your existing credit cards raise your credit limits if you don’t need them so high.

ACTIVITY 1:

You are entitled to check your credit report once per year, for free. Check yours now at www.annualcreditreport.com!

ACTIVITY 2: Let’s understand your credit score. Watch the clip below: What is a “good” credit score? (01:38) Note: [School Name] does not endorse any bank or financial institution; videos are shared for information purposes only.

Budgeting If there is a six-letter word students dislike more than “Monday,” it is probably “budget.” As working adults — with jobs, bills and often family to balance — a budget is a necessity, allowing for monthly expenses to be met and plans to be made for large purchases such as a home or a car. Starting students on the budgeting pathway early will encourage them to borrow the minimum needed for their education, and will lead them to successful and smart decisions as they enter the working world. Most students’ budgets are defined by the cost of attendance (COA) determined by their school. Students must work within the COA to ensure their money lasts the entire year. However, many financial aid administrators know that does not always happen, and students frequently request increases in their aid. How should financial aid administrators approach the topic of budgeting? Many financial aid offices already do some budgeting education. By providing the school’s COA, the groundwork is already laid for a conversation about the components of the budget, exceptions for potential increases and how students are expected to live within their means. There is no “overtime” in financial aid; students should first understand that the COA represents average costs for the school year but that they will need to plan — and should plan — to cover their education with the amount of aid offered, likely with limited options for more aid. Any opportunity to engage students about money issues should be embraced. If a student asks about tuition rates or housing costs, an administrator has the chance to ask about the course load for the year, where the student is living (in a condo?) and how (with a roommate?). Questions about purchasing books should, for the financial aid office, involve a discussion of the potential for renting books or buying them online. The expectation is that small discourses take root, leading to conversations or introspections about the value of budgeting without becoming a downward spiral of worry about financial minutiae.

Additional Topics to Increase Your Impact We know that your concern for your students’ financial health doesn’t end when they toss their cap. You have the power and unique position to help them prepare for the next big financial steps they’ll take, with education on major purchases and decisions they’ll face, such as: Major Purchases. Important financial milestones and purchases are right around the corner for graduates: a car, an engagement ring, a computer, a move to a new city for the dream job, even saving to attend a large national conference that will help them network. What role can your office play in helping students understand goal setting, saving, the appropriate use of credit, and planning for expenses after graduation? Buying a Home. Your students will be quick to answer What neighborhood do I want to live in? and How many bedrooms do I want? But are they prepared to answer How much home can I afford? Can I get pre-approved? What is a down payment? You could offer an entire webinar or booklet developed by your office and a mortgage professional. Investing Money and Forecasting Retirement. Colleges and universities have a vested interest in long-term, happy, successful alumni. Ideally, retirement should be a goal-setting process started at an early age. Why not start building the strategies for saving during the college years? FEAC wishes you the best in your program implementation, and applauds you for your interest in expanding your program, even as you work with less resources. Embrace partnerships, open your mind to student ambassadors, and be creative in your approaches, and you’ll find that your work will not only get done, but will be more effective than ever before. 11

Have a best practice to share? Send it to ContactUs@accesslex.org or Tweet it @AccessLexInst.

Happy program planning!

We’re here. To help you get there. With over 30 years of experience helping borrowers successfully navigate loan repayment, we’ve advised thousands of students just like yours. Our team of expert financial education counselors work closely with students to provide clear, unbiased information to set them on a sound financial path. And the best part? It’s completely free.