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Financial Aid Outside the Box

financial-aid-outside-the-box.jpgHere at the peak of summer, it’s hard to imagine that there’s only a couple of months before students return to school. But the new academic year is creeping up -- and, when it starts, the students heading to college campuses will look a little different. Following the trends of the last decade, more of them will be older, more will be returning to school after time off and more will be transferring from two-year to four-year colleges. We’ve looked before at how these shifting demographics have changed the landscape of the scholarship world; here’s a glimpse at how schools and scholarship providers are thinking outside the box when it comes to financial aid.

There’s an increased focus on aid to college upperclassmen.
Earlier this year, the New York Times published an eye-opening look at the drop in financial aid after students’ freshman years. The article analyzed findings of the National Postsecondary Student Aid Study and found “a decided drop in grant aid as students advance in their undergraduate careers:” Private-college students were hit the hardest, losing around $1,000, or 6 percent, of their average freshman grant by senior year.

To help students fill the gap, institutions and private scholarship providers are spending more time on post-freshman financial needs, by providing both funding and education. The Gates Foundation Millennium Scholarships, one of the nation’s best-known programs, fund the unmet need of 1,000 new recipients each year, and they’ve found that their awards cover much more for upperclassmen than for freshmen. According to program administrator Larry A. Griffith, “The program pays about 24 percent of scholars’ freshman-year costs, but almost 43 percent of sophomore costs.”

Here at Scholarship America, our Dream Award program provides scholarships to students in their sophomore year of college and beyond; to fight cost increases and drops in aid, the amount of the renewable award grows by $1,000 each year.

In addition to dedicated funding options, financial-aid education is crucial to student persistence. According to education consulting firm EAB, simple institutional changes like clearer financial aid letters can help reduce “summer melt” and keep more students eligible for aid. What’s more, “Clearer aid communication also frees up aid counselor time for higher-touch, proactive counseling for the most at-risk groups.”

There is a new awareness of the ways students can fall through the cracks.
Those “at-risk groups” include first-generation students, adult learners and those balancing school with full-time work -- and their financial aid needs are often unique. Even students whose tuition is completely covered can still run into financial difficulties when it comes to room, board, fees or textbooks -- and unexpected financial emergencies can derail even the most diligent students and savers.

Last year, Scholarship America worked with the Wisconsin HOPE Lab to research how emergency financial aid grants can impact students in poverty. Previous HOPE Lab research found that an alarming percentage of students face chronic food and housing insecurity, and that many are unprepared to deal with sudden financial setbacks. Across the country, nearly 100 programs exist to provide emergency financial grants to these students, and our Investing in Student Completion report outlines the reasons and methods to expand these programs.

Our own Dreamkeepers program is one of the longest-standing emergency assistance providers. Since 2004, Dreamkeepers has provided more than $3.4 million in financial assistance to nearly 6,700 students. With an average grant of around $500, the program is an ongoing real-world example of the kinds of grants that keep students in school.

And the idea is growing. Supported by Scholarship America, the California State Assembly is currently debating details of a bill to establish small emergency-grant programs at community colleges statewide. In the private sector, Great Lakes Education Philanthropy established the Dash Emergency Grant program -- a continuation and expansion of their support for emergency aid across the Midwest. Around the nation, financial aid providers are recognizing that a small grant goes a long way.

There’s increased recognition that college costs don’t end with graduation.
The recent, comprehensive Consumer Reports package on student debt is the latest wide-ranging examination of the ways increased costs and skyrocketing loan debt are affecting students well past graduation (and even into retirement.) By now, the litany of negative impacts is familiar: total loan debt in America exceeds $1 trillion, and many of the 42 million student debtors in the country are forced to delay future financial milestones like homebuying and saving for retirement.

To help more students pay back their loans faster, the federal government has introduced a wide array of assistance initiatives in the last decade. Public Service Loan Forgiveness allows graduates who work in certain fields (nonprofits, teaching, the public sector) to have loans forgiven after ten years. Pay As You Earn (PAYE) plans allow graduates to cap their monthly loan payments at a certain percentage of their income.

Both PAYE and public service loan forgiveness have expanded eligibility in the last few years  -- but enrollment numbers are still lower than expected. To help, the government is partnering with both colleges and the private sector on a program called the Student Debt Challenge. The Challenge invites companies and schools to create and innovate new debt-repayment initiatives; current pilot programs encompass everything from informational improvements to corporations paying back portions of their employees’ loans.

The landscape of loan repayment can be just as confusing as the financial aid process itself, but innovative use of data and communications (like this guide from Consumer Reports) can help families get a handle on the process before it’s too late. The realities of college funding continue to change every year -- and these new tools are vital in helping students keep up.

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Posted in financial aid, the debt crisis, financial literacy

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