Monday, March 27, 2017

Athletic and Financial Aid


Submitted by Rob Kniss, Michigan State University

With March Madness upon us, college basketball has taken center stage as fans across the country cheer on their favorite team hoping they will win the NCAA Men’s Basketball National Championship. Brackets are being filled out, even in financial aid offices (Gasp!), as people try to figure out which student-athletes will help their team to claim the ultimate prize. As the student-athletes who compete in these games have the national spotlight on them during this time, let’s take a closer look at how athletic aid and financial aid co-mingle, and how these student-athletes are affected.

As you can imagine, athletic aid and federal mix like oil and water, and the NCAA does a good job of legislating who can receive what. Federal aid (loans, Pell, SEOG, etc) is usually okay, but must adhere to the NCAA legislation depending on the scholarship the student-athlete receives. Institutional aid and outside scholarships are completely separate from this process and must be researched thoroughly to determine the awarding process, and if the award can be exempted through the NCAA or must be considered “countable” toward that student-athlete’s sports budget. There are many ways an institutional award or outside scholarship can be considered countable, but the general rule is if an institutional award doesn’t meet the NCAA merit guidelines, or an outside scholarship was awarded on athletic ability, they are countable. Of course the entire process is much more detailed than this, however for the purpose of this forum, this cursory explanation will suffice.
           
Athletic scholarships are awarded in two different manners: Head count sports and equivalency sports


Head count sport scholarships are restricted by a set number, and all student-athletes on scholarship for head count sports are on full scholarship. Therefore, if a sport offers ten scholarships, ten new athletes on that team can receive full scholarships each year. Since head count sport student-athletes receive full scholarships, which cover their full cost of attendance (COA), they are not eligible for any other form of federal aid with the exception of the Pell Grant. They may receive donor or institutional merit-based aid, provided the award can be exempted per NCAA guidelines and a matching reduction to their athletic scholarship is made so they are not exceeding the COA. Head count sports are typically the sports that generate revenue for the athletic departments at the institutions.

Equivalency sports also have a set number of scholarships.  However, these teams are allowed to divide the scholarships between multiple athletes. For example, a team with ten scholarships on their budget could award six full scholarships, divide the seventh between two athletes giving them each 50%, and divide the last three among the rest of the roster. The coach could also not give any full scholarships and just split the money among all the rostered athletes but not exceed the ten scholarships. Equivalency student-athletes may receive a combination of athletic aid, federal aid, donor aid, and institutional aid to fill their budget up to the COA, provided that the donor and institutional aid is allowed through the NCAA exemption process. Some donor and institutional aid will count toward the team’s budget limits per the NCAA rules and must be permitted by the coach and intercollegiate athletics for the athlete to keep. The teams that use the equivalency method are usually nonrevenue sports for the institution.

The athletic aid/financial aid coordinator (some institutions have this position within the office of compliance, and some have it in the financial aid office) works in conjunction with the Intercollegiate Athletics Compliance Office for awarding and processing of scholarships for student-athletes. Student-athletes who are on a full athletic scholarship have their full tuition & fees, room & board, books & supplies, and personal & miscellaneous costs covered for the academic year. Student-athletes who are in equivalency sports are typically offered partial scholarships based on the percentage of scholarship they were offered and agreed to on the tender they signed with the institution. These costs are set by the Office of Financial Aid each year based on their cost of attendance procedures.

So there you have it, a brief but hopefully informative explanation on how athletic aid and financial aid works for Division I athletes.  Now let’s hope that not all of your brackets have been busted!

For questions feel free to contact me at knissrob@msu.edu.


Rob S. Kniss is the Athletic Aid Coordinator for Michigan State University where he has worked for 11 years. He received his Bachelor’s and Master’s Degree from MSU and is currently finishing up his Ph.D at MSU as well. He will be defending his Doctoral Dissertation this May with his research focusing on college athletics, the NCAA, Pay for Play, Amateurism, and the legal battles the NCAA has faced.

Monday, March 20, 2017

Nudging Students Toward Smart Borrowing: Using loan summaries to help borrowers better understand their loans


By Matt Nettleton, Inceptia Strategic Business Director

As students increasingly rely on loans to finance part or all of their college education the need for relevant, timely information to help make informed borrowing choices has become more critical than ever.

Students themselves are indicating a need for such initiatives, as demonstrated through a number of surveys that uncover numerous confusing concepts for loan borrowers. Consider the following:

·         48% of borrowers either don’t know or incorrectly estimate the amount they have borrowed.1
·         28% incorrectly believe they have no federal loans at all.1
·         94% of student borrowers do not understand their loan repayment terms.2

The ramifications for borrower confusion can be significant. When students do not invest in or avail themselves of existing loan counseling resources, those students, as well as schools and society at large, suffer from the effects of over borrowing, lower degree attainment, increased attrition, and student loan default.

A number of schools and states, however, are using a simple yet innovative approach to help students actively manage loan debt as they progress toward degree completion. These institutions use loan summaries, sometimes called “debt letters,” to supplement loan counseling practices and expand on financial education outreachkeeping students apprised of their individual borrowing levels and allowing them to make informed choices about future repayment scenarios.

Loan summaries/debt letters are a simple, low-touch effort to keep student borrowers engaged in the active management of their loans while in school. While letters can vary among institutions, commonalities include a summary of current aggregate borrowing, estimated monthly repayment amounts, and resources for learning more or obtaining help. These summaries are strategically scheduled to be delivered at times when students are making financial aid and/or course registration decisions, thus providing a highly-effective, just-in-time intervention for borrowers.

Inceptia’s newest research brief, Loan Summaries: Nudging Students Toward Smart Borrowing, examines how three different universities administered their loan summary initiatives and the corresponding results on student behavior. The results offer support that this simple, lost-cost practice can impact not only borrowing behaviors, but also academic performance and enrollment persistence. Furthermore, the brief offers best practice considerations for schools looking at implementing loan summaries as to support student success.

The research brief and a recorded webinar diving deeper into the brief’s findings and offering insight and strategies on how loan summaries help borrowers better understand their loans can be viewed at https://www.inceptia.org/smart-borrowers/.

1. Akers, E. and Chingos, M. (2014, December). Are College Students Borrowing Blindly? Brookings Institution. Retrieved from: https://www.brookings.edu/wp-content/uploads/2016/06/Are-College-Students-Borrowing-Blindly_Dec-2014.pdf

2. Rathmanner, D. (2016, January). January 2016 Student Loan Borrower Survey. LendEDU. Retrieved from https://lendedu.com/blog/January-student-loan-survey.

Monday, March 13, 2017

Financial education throughout the student lifecycle



By Angela Henry, Strada Education Network

We know that “one and done” financial education for students is not enough. You need to consistently communicate throughout the stages of the student lifecycle, providing education on relevant topics at the right time.

Stage 1: Application and First 90 days of school
·         Look at your entrance counseling process. Your program may be meeting the regulatory requirements, but is it providing students with the information they need to set them off on the right foot?
·         Evaluate your financial literacy efforts. Are you providing students and their families access to the appropriate money management education to make a financial plan while they are going through application process?
·         Assess your packaging strategy.
·         Encourage students to complete a budgeting worksheet to understand their resources and expenses.
·         Help students research outside scholarships.
           
Stage 2: In-school period
·         Emphasize the student’s responsibility to borrow only what he or she needs and to spend that money wisely.
·         Look for opportunities to integrate money management education into the student's academic program.
·         Help your students access their National Student Loan Data System (NSLDS) account.
·         Talk to students about their loan needs for the entire length of their program, rather than thinking of borrowing as a once a year decision.
·         Don’t wait for exit counseling to remind students of repayment options.

Stage 3: Final year and program completion:
·         Ensure sure students register with their servicer(s) and establish initial contact.
·         Provide student the link to the NSLDS and help them find a listing of all of their loans.
·         Emphasize the importance of selecting the right repayment plan for their situation.
·         Remind borrowers that, as their circumstances and income change, they can make additional principal payments or change their repayment plan.

Stage 4: Post-graduation (or withdrawal):
·         Communicate with borrowers during grace period to let them know that you are there to help, and if they run into difficulty making payments, they should contact you.
·         Provide students who withdrew without completing their programs information on getting back in school.

If you need assistance with borrower outreach, consider a third-party cohort management solution.