Financial aid award season is upon us, a time that requires financial aid administrators to concurrently help students find ways to pursue their academic dreams while also realistically explaining how those financial decisions will impact their present and future.
And it’s not just prospective borrowers who may require financial counseling. Students can fall into risky financial straits at any point in their college careers, particularly if they near the end of their borrowing eligibility or are not successfully progressing toward a degree or credential.
Financial aid administrators are not currently permitted to broadly limit loan amounts to groups of students (though NASFAA has advocated to give them the authority to do so).
Given that restriction, here are a few steps to take when working with students and their parents who appear at risk of making an unmanageable financial decision.
1. Arm them with information: In order to make a sound college choice, families need to be well-versed on their total costs, loan repayment amounts, and likely earnings after graduation.
First, work with a prospective student or family to outline realistic college costs. Many families mistakenly assume a university’s average cost of attendance will automatically apply to them, said Karla Weber, financial aid advisor at the University of Wisconsin-Madison. Instead, help them to differentiate what costs are needs versus wants, given their particular situation, she recommends.
Then, work with them to understand their current funding options, including the basics of loans and the likelihood of repayment based on intended major.
“Coming through the door, because we can’t limit loans based on program of study, it’s basically just giving them information and saying, ‘Look, be smart about what program you choose and how much you borrow, because you’re going to have to pay it back,” said Richard Heath, director of financial aid at Anne Arundel Community College.
Help future borrowers to conceptualize the impact of their decisions by using online repayment calculators that can turn large and hazy sums into understandable monthly burdens.
2. Be honest but understanding: Strike a balance between naïve and harsh when helping families to evaluate what they can realistically afford for college. This may be especially important when working with families who have not yet set expectations for what they hope to be able to pay.
Temper your language, and reuse the information you’ve already provided to help families visualize the day-to-day consequences of their financial decisions.
“It’s more putting the bug in their ear than flat out saying, ‘You can’t afford this,’” Weber advised. Alternatively, “Say, ‘Let me lay out some other possibilities of ways you can make this work,’ instead of just saying, ‘There’s nothing you can do at all.’”
If you’ve exercised professional judgment to limit or deny a student’s loan—perhaps because they already have debt without credits to show for it or are pursuing a very low-paying career—break the news in person, Heath recommends.
“These are difficult conversations to have, and we almost never have that kind of conversation over the phone,” Heath said.
3. Delineate other options: Work creatively to present alternative routes to a student’s ultimate goals. Never assume families have considered – or even are aware of – options beyond their financial aid award letters or current funding sources.
Educate them on outside streams of funding that could cut their college costs, such as local scholarships and tuition reimbursement plans, David Peterson, financial aid director at Indiana University-Purdue University Fort Wayne (IPFW), recommended. In his community, a local foundation offers loan forgiveness to students who graduate and stick around for work – one of several opportunities many students are often “shocked” to learn about, Peterson said.
For some families, it also may be helpful to broaden their perceptions of the “traditional college experience.” Though it may make sense for a student to live at home for a year or two to save on living expenses, or to take a year off to establish residency in the state he or she wishes to attend college, that doesn’t always jibe with the family’s preconceived notions of college, Weber added.
“Living expenses are killers,” Heath noted. “If students have a viable community college nearby and they stay at home one more year or two more years, they’re going to save one-third to half off their total degree.”
4. Accept limitations: Ultimately, college choices rest with the students who will live with them. Short of using professional judgment to deny or limit a loan – which may be warranted in some cases – financial aid administrators can only give resources and guidance.
That can be tough when situations seem fraught with red flags, such as the family Weber counseled who was set on having an indebted older sibling cosign a hefty private loan for a prospective student.
“There’s only so much we can do and say; all of these decisions are up to [students and parents] and there’s only so much information and warnings that we can give them,” Weber said. “All we can do is give them as many resources as possible to help so that they can make the best decision.”
5. Keep tabs: Relinquishing decision-making control isn’t the final step in helping borrowers to stay on track, however. Work with other offices on your campus to keep track of students who may be falling short of earning credits or of making it through remediation.
At Anne Arundel Community College, financial aid administrators check for Satisfactory Academic Progress (SAP) every semester, rather than every year, and partner with the advising office to try to catch struggling students before they fall too far off track, Heath said.
“We don’t want them to dig a bigger hole for themselves,” Heath said. “We’d rather look at them sooner, provide intervention, and force them into academic advising and an academic success plan."
IPFW employs a similar cross-campus approach to check for triggers in student behavior, such as nearing a borrowing limit or a dipping GPA. Students who appear at risk are brought in for one-on-one meetings – a time-consuming commitment for the small financial aid office, but one that is the “most effective approach by a long shot,” Peterson said.
It’s part of Peterson’s plan to make his office for advising-centric for students at any point of their college careers, he added.
“We really try to build a relationship, to get students to understand that we’re here for them,” he said, “and not just when those aid award letters are sent out.”
What advice do you have for counseling students? Share it with us in the comments section below.
Publication Date: 3/26/2014