Embed Size (px)
Citation preview
Student Loans Webinar: Inspiring Responsible BorrowingColleen MacDonald KrumwiedeMay 31, 2017
• Research on Debt Levels • Financial Behavior• Reasonable Debt Levels• Resources for Average Incomes Post Graduation• Communicating through the Life Cycle of the Loan• Review school examples
Today’s Objectives
• $1.26 trillion in total U.S. student loan debt• 43.3 million Americans with student loan debt• Student loan delinquency rate of 11.6%• Average monthly student loan payment (for borrower aged
20 to 30 years): $351• Median monthly student loan payment (for borrower aged 20
to 30 years): $203
Key Facts on Debt Levels
Sources: “Household Debt and Credit Report” by Center for Microeconomic Data https://www.newyorkfed.org/microeconomics/hhdc.html
National Student Loan Debt
Average in 2015
• $30,100 average debt• 7 in 10 seniors have debt• State by State Data
Distribution of Borrowers by Amount of Outstanding Education Debt, 2014• $22,191 average debt• 43% students graduate
with some debt
Sources: The Institute for College Access & Success & Federal Reserve Bank of New York Consumer Credit Panel/Equifax & College Board
Financial Behavior Can Affect Ability to Repay
• Marshmallow Experiment – Walter Mischel
• Child gets 1 marshmallow nowor
• Wait 15 min. and can have 2
• Results with 600+ kids• 66% only got 1• 33% delayed gratification to get 2
Instant Gratification vs. Delayed Gratification
• Component of Emotional Intelligence • Intrinsic vs. extrinsic locus of control• Self-regulation
• Can be taught to college students• Brains developing until age 25
• Key components: • Trust a reward is real• Reward must be worth the wait• Predictable and structured environment
Behavior Modification: Delay Gratification
How Much Can People Afford to Repay?
Graduates Afford to Repay
US Department of Education
• < 10% of your discretionary income
College Board
• < 10-15% of gross monthly income
Sources: US Department of Education &
College Board
Parents Afford to Repay
US Department of Education
• < 20% of your discretionary income
College Board
• < 37% of gross monthly income
Sources: US Department of Education &
College Board
How to Project Your Earnings?
Source: U.S. Department of Labor's Occupational Outlook Handbook
Expected Earnings – US Department of Labor
••
•
••
Source: Salary.com
Expected Earnings – Salary.com
•
•
•
Source: Payscale.com
Average Salary – Payscale.com
••••
•
Repayment Calculators
Source: StudentLoans.gov
FSA Repayment Estimator
Source: YouCanDealWithIt.com
YouCanDealWithIt from PHEAA
Source: Navient.wealthmsi.com
Repayment Calculators
Provider Website Pros Cons FATV Rating
Federal Student Aid StudentLoans.gov Instant integration with personal loan
information
Lower utilization of graphs and visual aids;Issues with manual input
A
SimpleTuition PaybackSmarter.comIncludes tabs with multiple repayment plan options;Integration with NSLDS information
Requires creation of account for full customization. A-
PHEAA YouCanDealWithIt.com Asks questions and provides info on multiple repayment plan options
Outdated/broken links to find personal loan information. Results show on different page from inputs
B+
Navient Navient.wealthmsi.com
Highlights benefits of inflated payments and graphs annual cost and payments, Simple approach with results on same page as inputs.
No integration with NSLDS; Limited information on repayment plan options
B
Communication Opportunities
Communicate through the Loan Life Cycle• At initial financial aid application• When awarding• At each disbursement• Before re-applying for aid• Whenever awarded additional loan funds• Before graduation• At graduation• At the 5th month before repayment
• Suggest Optional Online Loan Counseling Session
• Remind that borrowers when they can still decline or reduce
• Send links to average salaries
• Provide links to repayment calculator
Types of Information to Convey
• Share videos that explain loan terms, repayment, and more
• Inform them of statistics from your school, state, or national
• Send funny memes, videos, or stories about over borrowing
Types of Information to Convey
Real School Case Studies
Denver SeminaryEncouraging Limited Borrowing
Location: Littleton, COSchool Type: 2-year private non-profitEnrollment: 929 (graduate-only) FT Students on Financial Aid: 57%Average Debt in 2015: $31,200Cohort Default Rate: 0.4%
Case Study: Denver Seminary
Results: Decreased average borrowing by $1,200 per year
Western Governors UniversityEncouraging Limited Borrowing
Location: Salt Lake City, UTSchool Type: 4-year private non-profitEnrollment: 70,504 (54,735 undergraduate) FT Beginning Undergrads on Financial Aid: 84%Average Debt in 2015: $19,050Cohort Default Rate: 4.5%
Case Study: Western Governors University
Results: Decreased average borrowing by $3,200 per year
