Counselors educate students on smart borrowing
By Deidre Ashe
No one likes to talk about personal finance. But that’s the problem.
“Personal finance is still a taboo topic. People are squeamish about it,” said Jeremy Brannan, assistant vice president of Student Financial Services at Southern New Hampshire University. “What has resulted in that squeamishness we have as a nation toward personal finance is a deficit of financial literacy.”
Student borrowing has risen by 186 percent over the last 10 years (Nerd Wallet).
There’s $1.4 trillion outstanding in federal student loans (Federal Reserve).
And it’s why SNHU wants to start a conversation to stop the overborrowing.
If you’re not sure where the problem lies, here’s an example Brannan shared: If an online undergraduate student takes one to two classes per term, that’s an average of $1,344 in tuition. Subtract $594 for a Pell Grant, which is applied before loans are considered. Now, subtract another $1,621 for the average federal student loan. On average, that’s leaving students with $871 extra they’re borrowing. And in the past, many students weren’t aware they didn’t need to accept all of the aid offered.
“Our goal is to help students choose to decline that excess,” Brannan said, noting that the Department of Education determines the amount of aid students receive. “That’s what we call smart borrowing.”
“What we’re trying to do here is make sure that you know that you borrow only what you need,” echoed Tim Lehmann, vice president of Student Financial Services. “Because I think a lot of times you’re in that moment, and you don’t realize that the decision you make now is going to have some consequences when you get done. And I think about as I’m repaying if I hadn’t borrowed as much as I did, I know I would be able to make some different choices … in terms of being able to afford a home, a car, kids, vacations, all those things.”
Brannan, Lehmann and Carol Suter, director of Student Financial Services, all can relate to SNHU students who use financial aid to invest in their educations. They all did the same, with different experiences, and as they’ve witnessed financing options change over the years, they want to make sure students have all the information they need.
“There are options out there for students,” Suter said. “Our student finance counselors can help students get into a good position for when they graduate and go into repayment.”
Brannan recalled how the idea for a financial persistence plan came to be. He participated in a pilot tutoring program for a statistics course, and when his student found out he worked in Student Financial Services, he asked Brannan if he’d have a few moments to look over his award. “I could tell very quickly he was borrowing the maximum,” Brannan said, noting that the student was enrolled at half time.
Brannan had to tell his student that at the pace he was working toward his degree and with the amount he was borrowing, “mathematically speaking, you cannot complete your degree. You will run out of money.”
Brannan heard silence on the phone and decided to bring the student’s academic advisor into the conversation to lay out a plan. It meant helping the student toggle his enrollment status – going full time every other term.
“To this day, he’s still following that plan,” Brannan said. “He’s on his last couple of courses, and he is going to come in right under the limit. But if he had continued on the path before, he would not have finished his degree with us and wouldn’t have elsewhere, either.”
That was two and a half years ago.
During the first nine months of 2017, SNHU’s student finance counselors helped reduce excess borrowing by more than $13 million.
Student Financial Services and Advising are now rolling out a financial persistence plan, with a pilot program beginning this year.
The partnership enables student finance counselors and academic advisors to work together to present students in the pilot who want to decrease their borrowing with options: either increase your enrollment to match your borrowing, or decrease your borrowing to match your enrollment.
“We’re working very hard to one day scale financial persistence plans for every student,” Brannan said.
Until then, it’s important for SNHU to educate students about money management as it relates to their educations and beyond.
“We can play a significant role in getting students to graduation,” Suter said. “Because if their goal when they start is to complete their program and graduate, but they may not have enough financing to do so, we can help them create a strategy so that they can afford to get to graduation.”