University Business - October 2011 - (Page 48)

cfo Campus “Dear (Debt-Ridden) Alum:” Making the Donor Pitch Tough Conversations affairs. Thus, the logistics of paying for college have been removed from the core of the educational and social experience that attracts people to higher education in the first place. Yet, the way that students manage their academic careers can affect how much they borrow and how well they can repay their loans after graduation. That’s changing. “We require students to build a budget that shows what their expected income will be when they graduate and what their expected expenses are when they graduate,” says Voytek of Coconino Community College. “We require them to also figure out what their monthly student loan repayment will be and how they will fit that into their budget. Sometimes, this is the first time that a student has ever tried to build a budget, and it can serve as an excellent reality check.” Coconino has added a one-credit personal money management course to the curriculum to help students make better decisions. At Prescott, Causey says that the student life office is getting more involved in financial issues, adding programs on finances for freshmen. Prescott has a self-directed curriculum, but students still need to meet certain course requirements to graduate. One campus initiative is to improve advising to help students graduate on time, reducing their borrowing and increasing alumni satisfaction. “Students need to use their years wisely,” Causey says. Full-time status for financial aid purposes is not the same as full-time status for on-time graduation. Some students who pay more attention to their financial-aid status than their academic status end up going to school an extra year, incurring an extra year of debt in the process. The academic staff sometimes exacerbates the problem by making recommendations that delay graduation, such as telling a student to drop a class or to take a light load until an ideal course becomes available. The faculty and academic advising staff often don’t understand the role of debt in their students’ lives. Financial aid and student life employees need to have this discussion with them. It may not seem like these decisions affect loan default rates, but they do. Undergraduates who finish in five years are slightly more likely to become delinquent or default than those who finish in four (28 percent versus 27 percent), according to American Student Assistance. The difference isn’t huge, but it can affect a campus’ default statistics, as well as graduate satisfaction with their college experience. Some institutions, including Western Michigan University and Manchester College (Ind.), have created guarantee programs that set out a degree plan and assure students that they will be able to get the classes necessary for graduation. At Western Michigan, for example, students who participate in the program agree to 48 | October 2011 Debt affects the conversation that aDvancement officers have with recent alumni. some borrowers feel anger toward their alma maters in part because of their student loans. research has shown that students with high debt levels are less likely to give money. the 2007 american student assistance report found that nearly half of borrowers surveyed had no desire to contribute to their alma mater. another 35 percent had interest in contributing, but expressed plans to wait until they had more money. that makes student loans a concern for campuses seeking alumni participation in annual campaigns, as well as for those that raise significant funds from alumni. american student assistance offers financial education programs for borrowers. “We typically would have discussions with just the financial aid office,” says anita myles, national director of asa’s boston-based school channel. “but this is really starting to have an impact on a school’s bottom line.” because of that, she notes that development and alumni advancement offices are often interested in the company’s services and willing to help subsidize or promote them, if needed. there’s another way the debt burden affects advancement: it creates a priority for raising scholarship and unrestricted funds. columbia college chicago has a major fundraising campaign going on now, and scholarships are one of the main priorities. the target donors include chicago-area arts patrons who have money and who understand the importance of arts education; because of the college’s small and relatively low-paid alumni base, the fundraising staff is looking for broad support. the goal is to allow more students to be able to afford four years on campus, meaning they would have less debt. take 30 credit hours a year, meet with an advisor once a semester, and declare a major after the first year. They are also expected to take classes that are available, even if not convenient—no passing on an 8:00 a.m. chemistry lab or an evening course if it fits the degree plan. If students do their part and still can’t graduate on time, fifth-year tuition is free. At Prescott, administrators have found that students sometimes take reduced loads or even a semester off to earn money for tuition. This increases time to graduation, but may reduce default rates. Prescott’s programs are designed to be flexible to accommodate these people, and that’s an advantage that admissions officers discuss when talking to prospective non-traditional students. No matter how a campus meets it, the academic goal should be graduation. Research has shown that students who complete their education are more likely to repay their student loan. Of those who started repaying loans in 2005, ASA found that 59 percent of undergraduate borrowers who left school without a degree became delinquent or defaulted on their loans. The conversation isn’t always easy, but it is necessary, and it is taking place right now. Will your campus be part of it? Ann C. Logue is a Chicago-based freelance writer who specializes in covering finance. universitybusiness.com http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - October 2011

University Business - October 2011
Contents
Editor's Note
College Index
Ad Index
Behind the News
Sense of Place
Viewpoint
Human Resources
Cloud Email
Tuition Setting
Campus CFO
Independent Outlook
End Note

University Business - October 2011